3 PARTS REMAINING PLEASE ANSWER ALL

*******PART C IS NOT $296.18!!!******

70 HI Question Help P10-9 (similar to) (Measuring growth) Solarpower Systems earned $20 per share at the beginning of the year and paid out $8 in dividends to shareholders (so, D $8) and retained $12 to imvest in new projects with an expected return on equity of 19 percent. In the future, Solarpower expects to retain the same dividend payout ratio, expects to earn a retum of 19 percent on its equity invested in new projects, and will not be changing the number of shares of common stock outstanding. a. Calculate the future growth rate for Solarpower's eamings b. If the investor's required rate of return for Solarpower's stock is 13 percent, what would be the price of Solarpower's common stock? e. What would happen to the price of Solarpower's common stock if it raised its dividends to $12 and then continued with that same dividend payout ratio permanendy? Should Solarpower make this change? (Assume that the investor's required rate of retum remains at 13 percent.) d. What would happened to the price of Solarpower's common stock if it lowered its dividends to $3 and then continued with that same dividend payout ratio permanently? Dpes the constant dividend growth rate model work in this case? Why or why not? (Assume that the imvestor's required rate of retum remains at 13 percent and that all future new projects will eam 19 percent) a. What is the sunure grown rate tor Solarpowers eamings 114% ( Round to two decimal places) b. If the investor's required rate of retum for Solarpower's stock is 13%, what would be the price of Solarpower's common stock? $ 557 (Round to the nearest cent) What would happen to the price of Solarpower's common stock if t had raised its dividends to $12 (D$12) and then continued with that same dividend payout ratio permanently? (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer Final Check parts remaining Clear Al MacBook % & 2 4 5 6 7 Q E T U D F J K 70 PT0-9 (Sllmmal t0) (Measuring growth) Solarpower Systems earned $20 per share at the beginning of the year and paid out $8 in dividends to shareholders (so, Do$8) and retained $12 to invest in new projects with an expected return on equity of 19 percent. In the future, Solarpower expects to retain the same dividend payout ratio, expects to eam a retum of 19 percent on its equity invested in new projects, and will not be changing the number of shares of common stock outstanding a. Calculate the future growth rate for Solarpower's eamings. b. If the investor's required rate of return for Solarpower's stock is 13 percent, what would be the price of Solarpower's common stock? e. What would happen to the price of Solarpower's common stock if it raised its dividends to $12 and then continued with that same dividend payout ratio permanently? Should Solarpower make this change? (Assume that the investor's required rate of retum remains at 13 percent) d. What would happened to the price of Solarpower's common stock if it lowered its dividends to $3 and then continued with that same dividend payout ratio permanently? Does the constant dividend growthi rate model work in this case? Why or why not? (Assume that the investor's required rate of return remains at 13 peroent and that all future new projects will earn 19 percent.) a. What is the suture growth rate tor solarpowers eamngs 11.4 % (Round to two decimal places) b. If the investor's required rate of retun for Solarpower's stock is 13 %, what would be the price of Solarpower's common stock? $557 (Round to the nearest cent.) c. What would happen to the price of Solarpower's common stock if it had raised its dividends to $12 (D $12) and then continued with that same dividend payout ratio permanently? (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer Final Check 3 Parts remaining Clear All MacBook 44 $ % & 3 4 6 7 E T Y K D