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Investors require a 15% rate of return on Brooks Sisters' stock (rs = 15%). a. What would the estimated value of Brooks' stock be if

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Investors require a 15% rate of return on Brooks Sisters' stock (rs = 15%). a. What would the estimated value of Brooks' stock be if the previous dividend was Do = $3.25 and if investors expect dividends to grow at a constant annual rate of (1) - 4%, (2) 0%, (3) 3%, or (4) 12%? Do not round intermediate calculations. Round your answers to the nearest cent. 1. $ 2. $ 3. $ 4. $ b. Using data from Part a, what is the constant growth model's estimated value for Brooks Sisters' stock if the required rate of return is 15% and the expected growth rate is (1) 15% or (2) 19%? Are these reasonable results? Round your answers to the nearest cent. Use a minus sign to enter negative values, if any. If your answer is zero, enter "0". Po: $ -Select -Select Yes, it is a reasonable result. 2. No, it is not a reasonable result, because in this case the value of stock undefined No, it is not a reasonable result, because in this case the value of stock is negative, which is nonsense. 2 Pois. -Select- -Select Yes, it is a reasonable result. c. Is it reaso No, it is not a reasonable result, because in this case the value of stock is undefined. No, it is not a reasonable result, because in this case the value of stock is negative, which is nonsense. -Select- C.Is it reasonable to expect that a constant growth stock would have g. > rs? -Select- -Select- Yes No

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