The Stambaugh Corporation current has earnings per share of $9.40. The company has no growth and pays out all earnings as dividends. It has a new project that will require an investment of $1.95 per share in one year. The project is only a two-year project, and it will increase earnings in the two years following the investment by $2.75 and $3.05, respectively. Investors require a return of 12% on Stambaugh stock.

Dividends = Div

Required Rate of Return = RRR

Price of stock = Div/RRR

=$9.40/0.12

= $78.33

Price of stock is $78.33

a) What is the value per share of the company's stock assuming the firm does NOT undertake the investment opportunity?