Investors require an 8 rate of return on Mather Company's stock (i e , r s 8 ) What is its value if the previous dividend was D 0 $3 00 and investors expect dividends to grow at a constant annual rate of (1) 5 , (2) 0 , (3) 3 , or (4) 7 Do not round intermediate calculations Round your answers to the nearest cent (1) $ (2) $ (3) $ (4) $ Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8 and the expected growth rate was (1) 8 or (2) 12 Round your answers to the nearest cent If the value is undefined, enter N A (1) $ (2) $ Are these reasonable results These results show that the formula does not make sense if the required rate of return is equal to or less than the expected growth rate These results show that the formula does not make sense if the required rate of return is equal to or greater than the expected growth rate These results show that the formula makes sense if the required rate of return is equal to or less than the expected growth rate These results show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate These results show that the formula does not make sense if the expected growth rate is equal to or less than the required rate of return Select IIIIIIIVVItem 7 Is it reasonable to think that a constant growth stock could have g r s It is not reasonable for a firm to grow indefinitely at a rate equal to its required return It is not reasonable for a firm to grow indefinitely at a rate higher than its required return It is reasonable for a firm to grow indefinitely at a rate higher than its required return It is not reasonable for a firm to grow even for a short period of time at a rate higher than its required return It is not reasonable for a firm to grow indefinitely at a rate lower than its required return Select IIIIIIIVVItem 8 Computech Corporation is expanding rapidly and currently needs to retain all of its earnings hence, it does not pay dividends However, investors expect Computech to begin paying dividends, beginning with a dividend of $0 75 coming 3 years from today The dividend should grow rapidly at a rate of 20 per year during Years 4 and 5, but after Year 5, growth should be a constant 10 per year If the required return on Computech is 12 , what is the value of the stock today Do not round intermediate calculations Round your answer to the nearest cent $

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Investors require an 8% rate of return on Mather Company's stock (i.e., r s = 8%). What is its value if the previous dividend was

Investors require an 8% rate of return on Mather Company's stock (i.e., r_s = 8%).

What is its value if the previous dividend was D₀ = $3.00 and investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 3%, or (4) 7%? Do not round intermediate calculations. Round your answers to the nearest cent.

(1) $

(2) $

(3) $

(4) $
Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12%? Round your answers to the nearest cent. If the value is undefined, enter N/A.
(1) $

(2) $

Are these reasonable results?
1. These results show that the formula does not make sense if the required rate of return is equal to or less than the expected growth rate.
2. These results show that the formula does not make sense if the required rate of return is equal to or greater than the expected growth rate.
3. These results show that the formula makes sense if the required rate of return is equal to or less than the expected growth rate.
4. These results show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate.
5. These results show that the formula does not make sense if the expected growth rate is equal to or less than the required rate of return.
-Select-IIIIIIIVVItem 7
Is it reasonable to think that a constant growth stock could have g > r_s?
1. It is not reasonable for a firm to grow indefinitely at a rate equal to its required return.
2. It is not reasonable for a firm to grow indefinitely at a rate higher than its required return.
3. It is reasonable for a firm to grow indefinitely at a rate higher than its required return.
4. It is not reasonable for a firm to grow even for a short period of time at a rate higher than its required return.
5. It is not reasonable for a firm to grow indefinitely at a rate lower than its required return.
-Select-IIIIIIIVVItem 8

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 20% per year - during Years 4 and 5, but after Year 5, growth should be a constant 10% per year. If the required return on Computech is 12%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.