Assume that It is now January 1, 2019. Wayne-Martin Electric Inc. (WME) has developed a solar panel capable of generating 200 % more electricity than any other solar panel currently on the market. As a result, WME is expected to experience a 14% annual growth rate for the next 5 years. Other firms will have developed comparable technology by the end of 5 years; and WME's growth rate will slow to 6 % per year indefinitely. Stockholders require a return of 13% on WME's stock. The most recent annual dividend (Do), which was paid yesterday, was $1.88 per share. a. Calculate WME's expected dividends for 2019, 2020, 2021, 2022, and 2023. Do not round intermediate calculations. Round your answers to the nearest cent D2019 D2020 D2021 D2022 $ D2023 $ b. Calculate the value of the stock today, Po. stock price that should exist at the end of 2023. The year end 2023 stock price can be found by using the constant grow ations. Round your answer to the nearest cent. Proceed by finding the present value of the dividends expected at the end of 2019, 2020, 2021, 2022, and 2023 plus the present value of the you must use the dividend expected in 2024, which is 6% greater than the 2023 dividend. Do not round intermediate-calculatioon Notice that to find the December 31, 2023, price, c. Calculate the expected dividend yield (D1/Po), capital gains yield, and total return (dividend yield plus capital gains yield) expected for 2019. (Assume that Po= Po and recognize that the capital gains yield is equal to the total return minus the dividend yield.) Do not round intermediate calculations. Round your answers to two decimal places. D1/Po % Capital gains yield Expected total return Expected total return d. How might an investor's tax situation more mature affect his or her decision to purchase stocks of companies s stock become "mature" for in the early stages of their lives, when they are growing rapldly, versus stocks of older, When does WME's purposes of this question? firms? I. It is of no interest firm's stock dividend income or capital gains investors whether is "mature" at the end of 2023. they recelve income, since taxes on both types of income can be delayed until the stock is sold. The People in high-income tax brackets stock is "mature" at the end of the capital gains II. will be more inclined to purchase "growth" stocks to take 2023. and thus delay the payment of taxes until a later date. The firm's III Some investors need can be delayed until the IV. It is of no interest to investors whether they receive cash dividends, while others would prefer growth. Investors must pay taxes each year on the capital gain during the year, while taxes on the dividends stock is sold. The firm's stock is "mature" at the end of 2023. dividend income or capital gains income, since both types of income are always taxed at the same rate. The firm's stock is "mature" at the end of 2023. types of income must be paid in the current year. The firm's v, It is of no interest to investors stock is "mature" at the end of 2023. whether they receive dividend income or capital gains income, since taxes on both Select- e. Suppose any calculations, your boss tells you she believes what general that WME's annual growth rate will be only 12 % during the next 5 years and that the would these growth rate firm's long-run growth rate will be only 4 %. Without doing effect changes have on the price of WME's stock? will be lower I. Since the will decline, and both the dividend firm's supernormal and normal growth rates are lower, the dividends and, hence, the yield and the capital gains yield will be smaller than they present value of the stock price original The total return from the stock were with the growth rates. firm's supernormal and normal growth rates are lower, the dividends and, hence, the and the capital gains I1. Since the present value of the stock price they were with the original growth rates will be lower. The total return from the stock will increase, and both the dividend yield yield will be greater than III. Since the rates are lower, the dividends and, yield will be the same. firm's supernormal and normal growth hence, the present value of the stock price will be lower. The total return from the stock will decline, and the dividend yield and the capital gains IV. Since the will remain the same, but the dividend yield will be larger and the rates are lower, the dividends and, hence, the capital gains yield will be firm's supernormal and normal growth present value of the smailer than they stock price will be lower. The were with the original growth rates. total return from the stock