Question

Reizenstein Technologies (RT) has just developed a solar panel capable of generating
200% more electricity than any solar panel currently on the market. As a result, RT is
expected to experience a 15% annual growth rate for the next 5 years. By the end of 5
years, other firms will have developed comparable technology, and RT's growth rate will
slow to 5% per year indefinitely. Stockholders require a return of 12% on RT's stock.
The most recent annual dividend (D), which was paid yesterday, was $1.75 per share.​

Answer 1

Answer:

Explanation:

RT expected dividend

Div ₀ = 1.75

Div₁ = Div₀ ₓ (1+g) = 1.75  ₓ  (1+0.15) = 1.75 ₓ  1.06 = 2.01

Div₂ = Div₁  ₓ (1+g) = 2.01 ₓ  (1+0.15) = 2.01  ₓ  1.06 = 2.31

Div₃ = Div₂ ₓ  (1+g) = 2.31 ₓ  (1+0.15) = 2.31  ₓ  1.06 = 2.66

Div₄ = Div₃  ₓ  (1+g) = 2.66  ₓ (1+0.15) = 2.66  ₓ 1.06 = 3.06

Div₅ = Div₄  ₓ  (1+g) = 3.06  ₓ (1+0.15) = 3.06  ₓ 1.06 = 3.52