Assume there are three companies that in the past year paid exactly the same annual dividend of $1.72 a share. In addition, the future annual rate of growth in dividends for each of the three companies has been estimated as follows Assume also that as the result of a strange set of circumstances, these three companies all have the same required rate of return (r8%). a. Use the appropriate DVM to value each of these companies b. Comment briefly on the comparative values of these three companies. What is the major cause of the differences among these three valuations? 2. For Buggies. Are-Us, the value of the company's common sharos is $(Round to the nearest cont.) For Steady Freddie, Inc., the value of the company's common shares is 5 (Round to the nearest cont.) For Gang Bunter Group, the value of the company's common shares is $). (Round to the nearest cent.) b. Comment briefly on the comparative values of these three companies. What is the major cause of the differences among these three valuations? (Select the best choice below.) O A. The value of Buggies Are Us is $21.50.compared to $44.75 for Steady Freddie, Inc., and $59.97 for Gang Busters Group. The difference in values is caused by the difference in dividend growth rates. The Buggies Are Us dividends do not grow, resulting in the lowest value. The dividends of Steady Freddie, Inc., grow at a constant rate of 4% forever, whereas Gang Busters Group's Group to be worth more than the Steady Freddie, Inc., stock dividends grow of approximately 12% for the first four years and 4% from year five to the foreseeable future. The higher growth individends in the earlier years causes the stock of Gang Busters OB. The value of Buggier Aro-US is $21.50, compared to $44.75 for Steady Freddie, Inc., and $50.97 for Gang Busters Group. The difference in values is caused by the difference in dividend growth ates. The Buggies Are Us dividends do not grow, resulting in the lowest value. The dividends of Steady Freddie, Inc., grow at a constant rate of 4% forever, whereas Gang Busters Group's dividends grow at approximately 12. for the first four years and 8% from year five to the foreseeable future. The higher growth in dividends in the earlier years causes the stock of Gang Busters Group to be worth more than Steady Freddie, Inc., stock. sod 2 g= 4% (Click on the icon located on the top-right corner of the data table below in order to these copy its contents into a spreadsheet.) Buggies-Are-Us Steady Freddie, Inc Gang Buster Group compa g=0 Year 1 $1.93 not gr (i.e., dividends (for the Year 2 $2.17 or the fil are expected foreseeable Year 3 $2.44 sy Fredd to remain at future) Year 4 $2.74 -0, compa $1.72/share) Year 5 and beyond: g = 4% do not go % for the fi ay Freddie, Print Done n Ival e of In th