Common stock valueConstant growthOver the past 6 years, General Hydronics has paid the dividends shown in the table below, The firm's dividend per share in 2020 is expected to be $1.42.

a.If you can earn 14% on similar-risk investments, what is the most you would be willing to pay per share in 2019, just after the $1.34 dividend?

b. If you can earn only 11% on similar-risk investments, what is the most you would be willing to pay per share?

c.Compare your findings in parts a and b, what is the impact of changing risk on share value?

Years Dividends per share

2019 $1.34

2018 1.26

2017 1.19

2016 1.12

2015 1.06

2014 1.00

a.If you can earn 14% on similar-risk investments, the most you would be willing to pay per share is

b.If you can earn 11% on similar-risk investments, the most you would be willing to pay per share is

c.According to the findings in parts a and b, as risk decreases, the required rate of return increases/decreases , causing the share price to rise/fall.