Investors require an 8% rate of return on Levine Company's stock(i.e., r_s = 8%).

1. What is its value if the previous dividend was D₀ =$1.50 and investors expect dividends to grow at a constant annualrate of (1) -4%, (2) 0%, (3) 2%, or (4) 6%? Do not roundintermediate calculations. Round your answers to the nearestcent.

   (1) $  

   (2) $  

   (3) $  

   (4) $  

2. Using data from part a, what would the Gordon (constant growth)model value be if the required rate of return was 15% and theexpected growth rate was (1) 15% or (2) 20%? Are these reasonableresults?
   
   1. These results show that the formula makes sense if the requiredrate of return is equal to or greater than the expected growthrate.
   2. These results show that the formula does not make sense if theexpected growth rate is equal to or less than the required rate ofreturn.
   3. These results show that the formula does not make sense if therequired rate of return is equal to or less than the expectedgrowth rate.
   4. These results show that the formula does not make sense if therequired rate of return is equal to or greater than the expectedgrowth rate.
   5. These results show that the formula makes sense if the requiredrate of return is equal to or less than the expected growthrate.
   
   -Select-
   
3. Is it reasonable to think that a constant growth stock couldhave g > r_s?
   
   1. It is not reasonable for a firm to grow indefinitely at a ratelower than its required return.
   2. It is not reasonable for a firm to grow indefinitely at a rateequal to its required return.
   3. It is not reasonable for a firm to grow indefinitely at a ratehigher than its required return.
   4. It is reasonable for a firm to grow indefinitely at a ratehigher than its required return.
   5. It is not reasonable for a firm to grow even for a short periodof time at a rate higher than its required return.
   
   -Select-