!!!!! PLEASE ANSWER PART III !!!!!

!!!!! My answers for the problems above !!!!!

Part B: Non-constant Growth Stock Valuation Part I: ROW 1 The following information represents the base case for a stock: Do=$1.50, r=10%, and g= 2% is the steady-state growth rate. This stock does NOT have high growth stage. Calculate the stock's value. Part II: ROW 2-5 Now calculate the value of the stocks while assuming there is a high growth rate before the steady state begins. ROW Do R HIGH GROWTH STAGE: G AND NUMBER OF PEROIDS STOCK VALUE 1 2 3 4 5 $1.50 $1.50 $1.50 $1.50 $1.50 10% 10% 10% 10% 10% none 5% for 2 periods 5% for 4 periods 10% for 2 periods 10% for 4 periods STEADY STATE GROWTH RATE 2% 2% 2% 2% 2% Part III. Answer the following questions based on your answers above. 1. 2. 3. 4. In general, how does a period of positive non-constant growth higher than the constant growth rate affect the stock's value? Why? How would negative non- constant growth affect the stock's value? Why? How does the number of years of non-constant growth affect value? Why? How does the rate of growth affect value? Why? How do the number of years of non-constant growth combined with the rate of growth affect value? What factors may cause a stock to have positive or negative non-constant growth? Can these factors last forever? 5. High growth stage: Row DO r STEADY STATE GROWTH RATE Stock Value g and number of peroids 1 none $ 2% 2% 2 $1.50 $1.50 $1.50 $1.50 $1.50 3 10% 10% 10% 10% 10% $ $ 2% 5% for 2 periods 5% for 4 periods 10% for 2 periods 10% for 4 periods 19.13 20.23 21.23 22.13 25.13 4 2% $ 5 01 2% $