7} Assume that the lGordon Growth Model is correct and that investors plan on holding stock for such a long time that the nal sales price does not affect valuations. Also assume that the required return on an investment in equity (kg) equals the expected real long-term Treasury bond yield {i'r } plus some \"equity\" premium (5) (the equity premium is the extra expected return on equities versus bonds that compensates stockholders for the extra risk of investing in stocks over bonds). In other words, kc = ir + s. (20 points) a} Suppose that the 00000th Corporation pays dividends of $40 per year in the first period (D1 - $40), that the expected annual growth rate of dividends is a constant 3 percent, the expected real long-term Treasury bond yield equals 5 percent, and the equity premium is 6 percent. What is the equilibrium price of a share in this company? Show your calculations. b) Keeping all else the same, what happens to the equilibrium price if the expected annual (constant) growth rate of the dividend increases to 6 percent? Show your calculations