Version D 1. North Great Timber Company will pay a dividend of $2 a share next year. After this, earnings and dividends are expected to grow at a 10 percent annual rate indefinitely. Investors currently require a rate of return of 15 percent. The company is considering several business strategies and wishes to determine the effect of these strategies on the market price per share of its stock. a. Continuing the present strategy will result in the expected growth rate and required rate of return stated above. b. Expanding timber holdings and sales will increase the expected dividend growth rate to 12 percent but will increase the risk of the company. As a result, the rate of re- tum required by investors will increase to 16 percent. c. Integrating into retail stores will increase the dividend growth rate to 8 percent and increase the required rate of return to 14 percent. 2. How does being a limited partner in a business enterprise differ from being a stock- holder, assuming the same percentage of ownership? FVIF. = (1 + i) PVIF, = 1/(1 + i)" in