Investors require a 15% rate of return on Brooks Sisters' stock (r_s = 15%).

1. What would the estimated value of Brooks' stock be if the previous dividend was D₀ = $4 and if investors expect dividends to grow at a constant annual rate of (1) - 6%, (2) 0%, (3) 7%, or (4) 10%? Round your answers to the nearest cent.
   1. $
   2. $
   3. $
   4. $
2. 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) 21%? Are these reasonable results? Explain.
   1. -Select-Yes, it is a reasonable result.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.Item 5
   2. -Select-Yes, it is a reasonable result.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.Item 6
3. Is it reasonable to expect that a constant growth stock would have g_L > r_s? -Select-YesNoItem 7