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 14% 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 8% per year indefinitely. Stockholders require a return of 15% on RT's stock. The most recent annual dividend (D0), which was paid yesterday, was $2.85 per share. Calculate RT's expected dividends for t = 1, t = 2, t = 3, t = 4, and t = 5. Do not round intermediate calculations. Round your answers to the nearest cent.

Answer 1

Answer:

The most recent annual divident paid by Reizenstein Technologies is = Do = $2.85.

Annual growth rate = 14%

Future Dividends will be calculted by the formula

= $Do(1+g)$

D1 = Do*(1+g) = 2.85*(1+0.14) = $3.25

D2 = D1*(1+g) = 3.25 *(1+0.14) = $3.70

D3 = D2*(1+g) = 3.70 *(1+0.14) = $4.22

D4 = D3*(1+g) = 4.22*(1+0.14) = $4.81

D5 = D4*(1+g) = 4.81*(1+0.14) = $5.49