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9-12. Valuation of a Constant Growth Stock Investors require an 8% rate of return on Math Company's stock (i.e., rs=8% ). a. What is its

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9-12. Valuation of a Constant Growth Stock Investors require an 8% rate of return on Math Company's stock (i.e., rs=8% ). a. What is its value if the previous dividend was D0=$1.25 and investors expect dividends to grow a constant annual rate of (1) 2%,(2)0%, (3) 3%, or (4) 5% ? b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12% ? Are these reasonable results? Explain. c. Is it reasonable to think that a constant growth stock could have g>rs ? Why or why not? a(1). $12.25 a(2).$15.63 a(3). $25.75 a(4). $43.75 b(1). Undefined b(2).$35.00, which is nonsense

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