Consider two stocks. For each, the expected dividend next year is $100, and the expected growth rate of dividends is 3 percent. The risk premium is 3 percent for one stock and 8 percent for the other. The economy's safe interest rate is 5 percent. Suppose the expected growth rate of dividends rises to 5 percent for both stocks. Compute the new price of each. Which stock's price changes by a larger percentage? Explain your answer.

I've done the math but I dont know how to explain why one is higher than the other.

Stock 1:

D: 100, G: 5%, I: 8%

stock price: = $3333.33

percentage change: = 66.67%

Stock 2:

D: 100, G: 5%, I: 13%

stock price: = $1250

Percentage Change: = 25%Stock 1:

D: 100, G: 5%, I: 8%

stock price: = $3333.33

percentage change: = 66.67%

Stock 2:

D: 100, G: 5%, I: 13%

stock price: = $1250

Percentage Change: = 25%