please answer ASAP its due soon!!
ivestors requite a 79 rate of return on Mother Company's trock (i.e. fi = 7ha). 3. Whot it its volue if the jirevout dividend whs Di a 52.00 end investort expect dividends to grow at a conatant annual rate of (1) 2%. (2) o\%. (3) 296 , or (4) 6m, Do not round intermediate celculations. Round your answert to the fatarast cant. (t) 5 (2) 5 (3) 5 (4) s b. Ueisg date trom peit in, whot would the Gordon (constant growth) model value be if the required rate of return was awh and the expected growth rete was (1)b is or (2)124 ? Round your answers to the nearest cent. if the value is undefined, anter N/A. (1) 3 (2) 8 Are these reasonable results? 1. These results show that the formulo does not make sense if the expected growth rate is equal to or less than the required rate of return. 11. 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. III. These results thow that the formula does not make sense if the required rate of return is equal to or graster than the expected growth rate. IV. These results ahow that the formula makes sense if the required rate of return is equal to or less than the expected growth rate. V. There resulte show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate. C. Is it reasonable to think thot a constant growth stock could have g>rs ? 1. It is reasonable for a firm to grow indefinitely at a rate higher than its required return. It. It is not reasenable for a firm to grow even for a short period of time at a rate higher than its required return. IIf. It is not reasonable for a firm to grow indefinitely at a rate lower than its requirediretum. TN, tt is not reasonable for a firm to grow indefinitely at a rate equal to its required return. W. It is not ressonable for a firm to grow indefinitely at a rate higher than its required return. astors require a 756 rate of return on Mather Company's stock (L.e., rn=7% ). a. What is its value if the previous dividend was D0=$2.00 and investors expect dividends to grow at a constant annuail rate of (1) -296, (2) 09 (3) 2%, or (4) 6% ? Do not round intermediate calculations. Round your answers to the nearest cent. (1) 5 (2) 5 (3) 5 (4) 5 b. Using data from phrt a, What would the Gordon (constant growth) model value be if the required rate of return was ayb and the expected. grewth rate was (1) 80 or (2) 120 ? Round your answers to the nearest cent. If the value is undefined, enter N/A. (2) 5 (2) 4 Are these reasonable results? 1. These resuits show that the formula does not make sense if the expected growth rate is equal to or less than the required rate of retum. IT. 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 rete. Itt. 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. W. These results show that the formula makes sense if the required rate of return is equal to or less than the expected growth rate. v. These results show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate. c. Is it reasenoble to think that a constant growth stock could have g> fs? 1. it is reasonable for a firm to grow indefinitely at a rate higher than its requifed return. 7. It is not reatonsble for a firm to grow even for a shoit period of time at a rate highter than its required return. I1t. it is not reaconsble for o firm to grow indefinitely at a rate lower than its required'return. W. It is not ressonoble foe a fitm to grow indefinitely at a rate equal to its required return. V. It is not resenabie for a firm to grow indefinitely at a rate higher than its required raturn
