Assume that it is now January 1, 2019. Wayne-Martin ElectricInc. (WME) has developed a solar panel capable of generating 200%more electricity than any other solar panel currently on themarket. As a result, WME is expected to experience a 14% annualgrowth rate for the next 5 years. Other firms will have developedcomparable technology by the end of 5 years, and WME's growth ratewill slow to 5% per year indefinitely. Stockholders require areturn of 12% on WME's stock. The most recent annual dividend(D₀), which was paid yesterday, was $1.55 per share.

1. Calculate WME's expected dividends for 2019, 2020, 2021, 2022,and 2023. Do not round intermediate calculations. Round youranswers to the nearest cent.
   

   D₂₀₁₉ = $  

   D₂₀₂₀ = $  

   D₂₀₂₁ = $  

   D₂₀₂₂ = $  

   D₂₀₂₃ = $  

2. 
   
3. Calculate the value of the stock today, . Proceed by findingthe present value of the dividends expected at the end of 2019,2020, 2021, 2022, and 2023 plus the present value of the stockprice that should exist at the end of 2023. The year end 2023 stockprice can be found by using the constant growth equation. Noticethat to find the December 31, 2023, price, you must use thedividend expected in 2024, which is 5% greater than the 2023dividend. Do not round intermediate calculations. Round your answerto the nearest cent.
   $   
   
4. Calculate the expected dividend yield(D₁/P₀), capital gains yield, and totalreturn (dividend yield plus capital gains yield) expected for 2019.(Assume that ?? and recognize that the capital gains yield is equalto the total return minus the dividend yield.) Do not roundintermediate calculations. Round your answers to two decimalplaces.

   D₁/P₀ =   %

   Capital gains yield =   %

   Expected total return =   %

   Then calculate these same three yields for 2024. Do not roundintermediate calculations. Round your answers to two decimalplaces.

   D₆/P₅ =   %

   Capital gains yield =   %

   Expected total return =   %

5. 
   
6. How might an investor's tax situation affect his or herdecision to purchase stocks of companies in the early stages oftheir lives, when they are growing rapidly, versus stocks of older,more mature firms? When does WME's stock become "mature" forpurposes of this question?
   
   1. People in high-income tax brackets will be more inclined topurchase "growth" stocks to take the capital gains and thus delaythe payment of taxes until a later date. The firm's stock is"mature" at the end of 2023.
   2. Some investors need cash dividends, while others would prefergrowth. Investors must pay taxes each year on the capital gainduring the year, while taxes on the dividends can be delayed untilthe stock is sold. The firm's stock is "mature" at the end of2023.
   3. It is of no interest to investors whether they receive dividendincome or capital gains income, since both types of income arealways taxed at the same rate. The firm's stock is "mature" at theend of 2023.
   4. It is of no interest to investors whether they receive dividendincome or capital gains income, since taxes on both types of incomemust be paid in the current year. The firm's stock is "mature" atthe end of 2023.
   5. It is of no interest to investors whether they receive dividendincome or capital gains income, since taxes on both types of incomecan be delayed until the stock is sold. The firm's stock is"mature" at the end of 2023.