Consider the following three stocks:

1. Stock A is expected to provide a dividend of $10.10 a share forever.
2. Stock B is expected to pay a dividend of $5.10 next year. Thereafter, dividend growth is expected to be 5.00% a year forever.
3. Stock C is expected to pay a dividend of $5.10 next year. Thereafter, dividend growth is expected to be 21.00% 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 11.00%, 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 8.00%, what is the stock price for each of the stocks?

b-2. Which stock is the most valuable?