Consider the following three stocks:

Stock $A$ is expected to provide a dividend of $$10\mathrm{.}40$ a share forever.

Stock $B$ is expected to pay a dividend of $$5\mathrm{.}40$ next year. Thereafter, dividend growth is expected to be $2\mathrm{.}00\%$ a

year forever.

Stock $C$ is expected to pay a dividend of $$5\mathrm{.}40$ next year. Thereafter, dividend growth is expected to be $18\mathrm{.}00\%$ a

year for five years $($years $2$ through $6,$ as C recovers from a severe recession$)$ and zero thereafter.

a$-1.$ If the cost of equity for each stock is $8\mathrm{.}00\%,$ what is the stock price for each of the stocks?

a$-2.$ Which stock is the most valuable?

b$-1.$ If the cost of equity for each stock is $5\mathrm{.}00\%,$ what is the stock price for each of the stocks?

b$-2.$ Which stock is the most valuable?

Complete this question by entering your answers in the tabs below.

Req A$1$

If the cost of equity for each stock is $8\mathrm{.}00\%,$ what is the stock price for each of the stocks?

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.