Silicon Wafer company currently pays a dividend `of $1 per share and a share price of $20.
a) If this dividend was expected to grow at a 12 percent forever, what is the firm expected or required rate on equity using a dividend discount model approach?
b) Instead of situation in part (a), suppose that the dividend was expected to grow at a 20 percent rate for five years and at 10 percent per year thereafter. Now what is the firm expected or required return on equity.