vonconstant Growth Stock valuation

Reizenstein Technologies $($RT$)$ has just developed a solar panel capable of generating $200\%$ more electricity than any solar panel currently on the market. As a result, RT is expected to experience a $20\%$ annual growth rate for the next $5$ years. By the end of $5$ years, other firms will have developed comparable technology, and RT$\text{'}$s growth rate will slow to $5\%$ per year indefinitely. Stockholders require a return of $10\%$ on RT$\text{'}$s stock. The most recent annual dividend $(D_0),$ which was paid yesterday, was $$2\mathrm{.}95$ per share.

a$.$ Calculate RT$\text{'}$s expected dividends for $t=1,t=2,t=3,t=4,$ and $t=5.$ Do not round intermediate calculations. Round your answers to the nearest cent.

$D_1=$$

$D_2=$$

$D_3=$$

$D_4=$$

$D_5=$$

b$.$ Calculate the estimated intrinsic value of the stock today, widehat$(P{)}_0.$ Proceed by finding 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 that should exist at $t=5,$widehat$(P{)}_5.$ The widehat$(P{)}_5$ stock price can be found by using the constant growth equation. Note that to find widehat$(P{)}_5$ you use the dividend expected at $t=6,$ which is $5\%$ greater than the $t=5$ dividend. Round your answer to the nearest cent. Do not round your intermediate computations.

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$$

c$.$ Calculate the expected dividend yield $(\frac{D_1}{w}$idehat$(P{)}_0)$ ; the capital gains yield expected during the first year, and the expected total return $($dividend yield plus capital gains yield$)$ during the first year. $($Assume that widehat$(P{)}_0=P_0,$ and recognize that the capital gains yield is equal to the total return minus the dividend yield.$).$ Round your answers to two decimal places. Do not round your intermediate computations.

Expected dividend yield $\%$

Capital gains yield $\%$

Expected total return $\%$

Also calculate these same three yields for $t=5(e,g,\frac{D_6}{w}$idehat$(P{)}_5).$ Round your answers to two decimal places. Do not round your intermediate computations. Expected dividend yield $$

$3\%$

Capital gains yield $\%$

Expected total return $\%$