k_s = 10% g = 5% DIV₁= $1 k_RF = 3% _s = 1

1. What is the estimated worth of ABCs stock?
2. Assume ABCs growth rate rises to 6%. How does this affect ABCs stock?
3. If ABC is not expected to grow, what will its stock price become?
4. If k_s for ABC rises to 12%, what will its stock price become?
5. If ABC increases its debt level, what effect will it have on its _s?
6. Explain why k_s must be less than g.
7. What are the advantages of using the Gordon Growth Model, which is premised on expected future dividends?
8. If ABC increases its debt level but does not increase its profits (the bottom line), what is the initial effect on its stock price?
9. The model shows that a company's stock price is sensitive to the dividend growth rate chosen and that the growth rate cannot exceed the cost of equity. Is this always true?
10. What is the difference between the two versions of the Gordon Growth Modelthe stable growth model and the multistage growth mode

Pleaseee Answer Q NO.1