6. Expected returns, dividends, and growth The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows: P0=^4DD1 Which of the following statements is true? Increasing dividends may not always increase the stock price, because less earnings may be invested back into the firm and that impedes growth. Increasing dividends wia always increase the stock price. Increasing dvidends will alwars decrease the stock price, because the firm is depleting internal funding resources. Walter utilities is a dividend-paying company and is expected to pay an annual dividend of 50.65 at the end of the year, its dividend is expected to grow at a constant rate of 9.50% per year. If Waiter's stock currently trades for $12.00 per share, what is the expected rate of return? 14.92% 921.575 954.95% 1,008.08% Which of the following statements will always hold true? The constant growth valuation formula is not appropriate to use for zero growth stocks. The constant growth valuation formuts is not oppropriate to use uniess the compamy's growth rate is expected to remain constant in the future. It will never be appropriate for a rapidly growing start-up company that pays no dividends at present, but is expected to pay dividends at some point in the future, to use the constant growth valuation formula