Question: Your company has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of

Your company has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 18% in the coming year and at 15% the year after. The dividend is estimated to settle down at a constant growth rate of 5% starting in the 3rd year. The last dividend paid (D0) of your company was $2.0 and investors require a 20% return. a) What is the current value per share of your companys stock? b) What is the expected capital gain yield in year 1 and year 10 respectively?

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