A stock analyst is valuing a corporation with 2 stages of constant growth, with growth rates g₁ and g₂.

The analyst assumes that the first period of growth, g₁ = .15, and this will last for 10 years.

The permanent growth rate after 10 years, g₂ = .03, will last forever.

The analyst assumes that the required return, R = .08.

Which one assumption change will cause an increase in the value of P₀ the analyst finds?

No calculations are needed--you can think this through.

a)		change g2 to .02
b)		change R to .10
c)		change g1 to .12.
d)		change the years of the first period of growth from 10 years to 14 years.