Assume there are three companies that in the past year paid exactly the same annual dividend of $$$$1\mathrm{.}74$ a share. In$$ addition, the future annual rate of growth in dividends for each of the three companies has been estimated as$$ follows:

Buggies$-$ Are$-$ US

g $=0$

$($i$.$e$.$ dividends

are expected

to remain at

$$1\mathrm{.}74/$share

Us Steady Freddie, Inc

G$=7\%$

Gang Buster Group

Year $12\mathrm{.}00$

$22\mathrm{.}30$

$32\mathrm{.}64$

$43\mathrm{.}05$

$53\mathrm{.}50$

Year $6$ and beyond:

g $=7\%$

Assume also that as the result of a strange set of$$ circumstances, these three companies all have the same required rate of return $($r$=14\%).$

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?