Original Value

Using the data from problem 5:
• a. If D1 and Ke remain the same, but g goes up to 9 percent, what will the new stock price be? Briefly explain the reason for the change.
• b. If D1 and g retain their original value ($1.60 and 8 percent), but Ke goes up to 15 percent, what will the new stock price be? Briefly explain the reason for the change.