2) Calculate the value of the stock today, Po. **Hints: Find the present value of the dividends expected at t = 1,t = 2, t= 3, t = 4, and t=5 plus the present value of the stock price which should exist at t = 5, Ps. The stock price can be found by using the constant growth equation. To find Ps, you use the dividend expected at t= 6. in the numerator of the formula, this t= 6 dividend is five percent greater than the t= 5 dividend. Step One: Calculate of the stock's "horizon value" as oft = 5: Step Two: Calculate the present value of the stock's expected future cash flows: 3) Calculate the following for Year 1: a. The expected dividend yield: D / Po b. The capital gains yield: c. The expected total return: Dividend Yield + Capital Gains Yield *Hint: The "Capital Gains Yield" is equal to the Total Return less the Dividend Yield Focus LIE Thompson Technology, Inc. has just developed a solar panel capable of generating 200 percent more electricity than any solar panel currently on the market. As a result, Thompson Technology is expected to experience a 15 percent annual growth rate for the next five years. By the end of five years, other firms will have developed comparable technology, and Thompson's growth rate will slow to five percent per year indefinitely. Stockholders require a return of 12 percent on Thompson's stock. The most recent annual dividend (Do), which was paid yesterday, was $1.75 per share. 1) Calculate Thompson Technology's expected dividends for t= 1,t=2,t=3,t=4, and t = 5. Year t=1 t=3 34 tes Annual Dividend $2.0125 $23144 $2.6615 $2 6615 $3.0608 arch o