How much would you be willing to pay for it today

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The Blinkelman corporation has announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company's earnings, currently (year 0) 1$ per share to grow by 50% per year for the next 3 years, and by 8% per year thereafter. Blinkelman does not currently pay a dividend but it expects to pay out 20% of its earnings beginning 2 years from now. The payout ratio is expected to become 50% in 5 years and to remain at that level. The company's marginal tax rate is 40%. If you require a 20% rate of return on a stock such as this, how much would you be willing to pay for it today?

Reference no: EM13255535

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