Summit Systems has an equity cost of capital of $,$ will pay a dividend of $$$ in one$$ year, and its dividends had been expected to grow by per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of per year forever.

a$.$ What is the drop in value of a share of Summit Systems stock based on this$$ information?

b$.$ If you tried to sell your Summit Systems stock after reading this$$ news, what price would you be likely to$$ get? Why?

Question content area bottom

Part $1$

a$.$ What is the drop in value of a share of Summit Systems stock based on this$$ information?

The drop in value of a share of Summit Systems stock is $$$

$$

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