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Problem 2: swink Electric, Inc., has just developed a solar panel capable of generating 1200 percent more electricity than any solar panel currently on the
Problem 2: swink Electric, Inc., has just developed a solar panel capable of generating 1200 percent more electricity than any solar panel currently on the market. As a result, Swink is expected to experience a 15 percent annual growth rate for the next five years. When the five-year period ends, other firms will have developed comparable technology, and Swink's growth rate will slow to 5 percent per year indefinitely. Stockholders require a return of 12 percent on Swink's stock. The firm's most recent annual dividend (DO), which was paid yesterday, was $1.75 per share. 2.a. (8 points) Calculate Swink's expected dividends for the next five years and present values of these dividends. INPUT DATA: Supernormal growth Normal growth rate Req. rate of return Last dividend (D) Supernormal period years
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