Among 4 shares A, B, C, D with equity cost 12%:

A) Which share has more value if the following are valid:

i) Share A has current dividend 6, whose increase is expected to be stable and equal to 8% until forever. ii) Share B is expected to distribute dividend 11 per share forever. iii) Share C is expected to distribute fixed dividend 9 which will be increased at a stable rate of 2% until forever. iv) Share D is expected to distribute next year dividend 8 which is expected to be increased at a rate of 10% for the next 6 years (until year 7) and then to remain stable at the same rate with year 7 forever. ) If the current share market price of A, C, B, D is 160, 92, 91 and 98 respectively, would you choose to sell or buy in each case? Justify your position.

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