Investors require a 13% rate of return on Brooks stock (rs =13%).

a. What would the estimated value of Brooks stock be if the previous dividend were D0 = $3.00 and if investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5%, (4) 10%?

b. Using data from part a, what is the constant growth model's estimated value for Brooks stock if the required rate of return is 13% and the expected growth rate is (1) 13% or (2) 15% ? Are these reasonable results? Explain.

c. Is it reasonable to expect that a constant growth stock would have g > rs?