Calculate the expected dividend yield

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Question - Simkins Inc has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, Simkins is expected to experience a 15% annual growth rate for the next 3 years. By the end of 3 years, other firms will have developed comparable technology, and Simkins growth rate will slow to 5% per year forever. Shareholders require a return of 12% on Simkins stock. The most recent annual dividend, which was paid yesterday, was $1.00 per share.

a) Calculate the current market value of Simkins stock. Show your work!

b) Calculate the expected market price in one year. Show your work!

c) Calculate the expected dividend yield and capital gains yield expected during the first year. Show your work!

Reference no: EM132934536

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