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myesters require an 8% rate of return on Mather Company's stock (1.e2,r1=8%). A. What is its value if the previous dividend was D5=$2.75 and investors

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myesters require an 8% rate of return on Mather Company's stock (1.e2,r1=8%). A. What is its value if the previous dividend was D5=$2.75 and investors expect dividends to grow at a constant annual rate of (1) - 3%, (2). 0\%, (3) 3%, or (4) 5%2 De n round intermediate calculations. Round your answers to the nearest cent. (1) 5 (2) 5 (3) 5 (4) 5 b. Using data from partia, what would the Gordon (constant qrowth) model value be if the required rate of returr was 8% and the expected growth rate was (1) Bqh ar (2) 12%. Round vour answers to the nearest cent. If the value is undefined, enter N/A. (1) 8 (2) 4 Are these reasenabie results? 1. These results show that the formula does not make sense if the required rate of roturn is equal to or greater then the expected growth rate 11. Thece results show that the formula makes sense if the required rate of raturn is equal to or less than the expected growth rate. 111. These resuits show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate. TV. These results show that the formula does not make sense if the expected growth rate is equal to or less than the requirnd rate of return. V. These results show that the formula does not make sonse if the required rate of return is nqual to or less than the expected gronth rate. C. Is it reasonoble to think that a constant growth stock could have >r, ? 1. It is reasonable for a firm to grow indefinitely at a rate higher than its required retum. It. It is not reasonable for a firm to grow even for a short period of time at a rate higher than its required retum. 1II. It is not reasonable for a firm to grow indefinitely at a rate lower than its required return. TV. It is not rensonable for a firm to grow indefinitely ot a rate equal to its required retum, V. It is not ressonable for a firm to grow indefinitely at a rate higher than its required return

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