You are trying to determine the optimal dividend policy for your all equity financed company using a PE multiples approach. You consider your company to be a stable growth rate firm. Your return on reinvested earnings is $14\%$ and your required rate of return on equity is $20\%.$ You have two choices: $($i$)$ pay a $90\%$ dividend; or $($ii$)$ pay a $70\%$ dividend. Which dividend policy maximizes the value of the company$$s stock?

Question $1$ options:

a$)$

$90\%$ dividend because it leads to a lower PE multiple

b$)$

$90\%$ dividend because it leads to a higher PE multiple

c$)$

$70\%$ dividend because it leads to a lower PE multiple

d$)$

$70\%$ dividend because it leads to a higher PE multiple