Write out and explain the valuation formula for a constant growth stock. Describe how the formula for a zero growth stock can be derived from that for a normal constant growth stock. Firm A is expected to pay a dividend of $1.00 at the end of the year. The required rate of return is rs=11%. Other things held constant, what would the stock's price be if the growth rate was 5% ? What if g was 0% ? ($16.67, $9.09) Firm B has a 12% ROE. Other things held constant, what would its expected growth rate be if it paid out 25% of its earnings as dividends? 75% ? (9%,3%) If Firm B had a 75% payout ratio but then lowered it to 25%, causing its growth rate to rise from 3% to 9%, would that action necessarily increase the price of its stock? Why or why not