Surf & Turf Hotels is a mature business, although it pays no cash

dividends. Next year's earnings are forecasted at $$84$ 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.

b$.$ Now Surf & Turf's CFO announces a switch from repurchases to a

regular cash dividend. Next year's dividend will be $$4\mathrm{.}20$ 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?

Note: For all requirements, do not round intermediate

calculations. Round your answers to $2$ decimal places.

a$.$ Current stock price

b$.$ Stock price