Recall that based on a constant GBP1.50 annual dividend and required return of 15 percent, we showed Shipline PLC’s expected stock price to be GBP10.00. Suppose instead that an investment analyst assumes that Shipline will grow its annual dividend by 6 percent per year indefinitely 

1. How does Shipline’s expected share price change under the analyst’s constant growth assumption? 

2. How does Shipline’s expected share price change if we assume instead an initial dividend growth of 6 percent over a three-year period followed by constant 2 percent dividend growth thereafter?