$1.$ Write out and explain the valuation formula for a constant growth stock.

$2.$ Describe how the formula for a zero growth stock can be derived from the formula for a normal constant growth stock.

$3.$ Firm A is expected to pay a dividend of $$1\mathrm{.}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\%?($$$16\mathrm{.}67,$ $$9\mathrm{.}09)$

$4.$ 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? $75\%?(9\%,3\%)$

$5.$ 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?