Q.2A)What happens to the price of a common stock if g > k_s? Give your arguments.

B)Snyder Computer Chips Inc. is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15 percent during the next 3 years, at 13 percent in the fourth year, 12 percent in the fifth year, and at a constant rate of 7 percent thereafter. Snyder's last dividend was Rs.2.25, and the required rate of return on the stock is 14 percent.

Required:

a)Calculate P₂ and P₄.

b)Calculate Dividend Yield and Capital Gain Yield in Year-3