Summit Systems has an equity cost of capital of $10\mathrm{.}0\%,$ will pay a dividend of $$2\mathrm{.}00$ in one year, and its dividends had been expected to grow by $6\mathrm{.}0\%$ per year. You read in the paper that Summit

Systems has revised its growth prospects and now expects its dividends to grow at a rate of $3\mathrm{.}5\%$ per year forever.

a$.$ What is the drop in value of a share of Summit Systems stock based on this information?

b$.$ If you tried to sell your Summit Systems stock after reading this news, what price would you be likely to get? Why?

a$.$ What is the drop in value of a share of Summit Systems stock based on this information?

The drop in value of a share of Summit Systems stock is $

$.($Round to the nearest cent.$)$

b$.$ If you tried to sell your Summit Systems stock after reading this news, what price would you be likely to get?

The price of a share would likely be $$.($Round to the nearest cent.$)$

Why? $($Select the best choice below.$)$

A$.$ You would receive $$50\mathrm{.}00$ because when you bought the stock, the dividend growth rate was still $6\mathrm{.}0\%.$

B$.$ You would receive $$30\mathrm{.}77$ because markets are efficient and would incorporate the information about the new growth rate immediately.

C$.$ You would receive $$50\mathrm{.}00$ if you act very quickly because it takes a day or two for markets to incorporate the information about the new growth rate

D$.$ You would receive a price between $$30\mathrm{.}77$ and $$50\mathrm{.}00$ because you should get a blend of the old and new growth rate of dividends.