Surf & Turf Hotels is a mature business, although it pays no cash dividends. Next year's earnings are forecasted at $$56$ million. There

are $10$ million outstanding shares. The company has traditionally paid out $50\%$ of earnings by repurchases and reinvested the

remaining earnings. With reinvestment, the company has generated steady growth averaging $5\%$ per year. Assume the cost of equity

is $12\%.$

a$.$ Calculate Surf & Turf $\text{'}$s current stock price, using the constant$-$growth DCF model. $($Hint$.$ Take the easy route and estimate overall

market capitalization.$)($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$

Current stock price

b$.$ Now Surf & Turf's CFO announces a switch from repurchases to a regular cash dividend. Next year's dividend will be $$2\mathrm{.}80$ per

share. The CFO reassures investors that the company will continue to pay out $50\%$ of earnings and reinvest $50\%.$ All future payouts

will come as dividends, however. What would be Surf & Turf $\text{'}$s stock price? $($Do not round intermediate calculations. Round your

answer to $2$ decimal places.$)$

Stock price