1. Common stock valueVariable growth : LawrenceIndustries' most recent annual dividend was $2.45 per share (D0=$2.45), and thefirm's required return is 15%. Find the market value ofLawrence's shares when dividends are expected to grow at 10% annually for 3years, followed by a 4% constant annual growth rate in years 4 to infinity.

The market value ofLawrence's shares is $ _______ (Round to the nearestcent.)

2. Common stock valueVariable growth LawrenceIndustries' most recent annual dividend was $1.17 per share (D0=$1.17), and thefirm's required return is 10%. Find the market value ofLawrence's shares when dividends are expected to grow at 8% annually for 3years, followed by a 7% constant annual growth rate in years 4 to infinity.

The market value ofLawrence's shares is $_________ (Round to the nearestcent.)

3 . Management action and stock valueREHCorporation's most recent dividend was $2.09 pershare, its expected annual rate of dividend growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect thefirm's activities. Determine the impact on share price for each of the following proposed actions.

a.Donothing, which will leave the key financial variables unchanged. (Round to the two decimal places)

b.Invest in a new machine that will increase the dividend growth rate to 8% and lower the required return to 12%.(Round to the two decimal places)

c.Eliminate an unprofitable productline, which will increase the dividend growth rate to 6% and raise the required return to 19%.(Round to the two decimal places)

d.Merge with anotherfirm, which will reduce the growth rate to 4% and raise the required return to 16%. (Round to the two decimal places)

e. Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth rate to9% and increase the required return to 19%.(Round to the two decimal places)