Sweet Candy will pay dividend of $0.72 next year. The CEO of the company declared that the company will maintain a constant growth rate of 7% per year every year from now on.

a. How much will you pay for the stock if your required return is 10%?

b. How much will you pay for the stock if your required return is 8%?

c. Based on your answer in parts a and b , give one disadvantage of the constant growth model?