You read in the paper that Summit Systems will pay a dividend of $2.25 this year. At that point you expected Summit's dividend to grow by 6.0% per year. Today you read in the paper that Summit Systems has revised its growth prospects and expects its dividends to grow at a rate of 4.0% per year forever. The firm's equity cost of capital is 11.0%.

a. What is the value of a share of Summit Systems stock based on the original expected dividend growth of 6.0% per year?

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