Question 1: (15 points)

It is now December 7, 2019. Pelage Solar Corporation in San Leandro California is expected to experience a 28% annual growth for the next seven years. By the end of seven years other firms will have developed comparable technology, and Pelages growth rate will slow to 8% per year indefinitely. Stockholders require a return of 12% on the firm's stock. The most recent annual dividend D_0, which was paid yesterday, was $3.00 per share.

a. Calculate the expected dividends for 2019 through 2026.

b. Calculate the value of the Pelages stock today.

c. Calculate the current Dividend yield and the Capital gains yield respectively.

d. Suppose that the stock is traded at NASDAQ at $131.49 dollars. Is the stock Overvalued or Undervalued? Explain your answer properly.