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4. Investors require a 15% rate of return on Levine Company's stock (that is, r, = 15%). a. What is the value if the

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4. Investors require a 15% rate of return on Levine Company's stock (that is, r, = 15%). a. What is the value if the previous dividend was Do = $2.00 and investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5%, or (4) 10%? b. Using data from Part a, what would the Gordon (constant growth) model value be if the required rate of return was 15% and the expected growth rate was (1) 15% or (2) 20%? Are these reasonable results? Explain. c. Is it reasonable to think that a constant growth stock could have g>r,? Explain.

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