Investors require a 17% rate of return on Levine Company's stock (that is, rs = 17%). What is its value if the previous dividend was D0 = $1.25 and investors expect dividends to grow at a constant annual rate of (1) - 3%, (2) 0%, (3) 4%, or (4) 10%? Round answers to the nearest hundredth. a. b. c. d.

2.) Using data from part a, calculate the Gordon (constant growth) model's value for Brooks Sisters stock if the required rate of return is 17% and the expected growth rate is (1) 17% or (2) 23%. Are these reasonable results? Explain.

3.) Is it reasonable to expect that a constant growth stock would ahve g> rs?