Conroy Consulting Corporation (CCC) has been growing at a rate of 30% per year in recent years.

Question:

Conroy Consulting (CCC) has been growing at a rate of 30% per year in recent years. This same nonconstant growth rate is expected to last for another 2 years (g0,1 = g1,2 = 30%).
a. If D0 = $2.50, rs = 12%, and gL = 7%, then what is CCC's stock worth today? What is its expected yield for the first year? What is the expected capital gains yield for the first year?
b. Now assume that CCC's period of nonconstant growth is to last another 5 years rather than 2 years (g0,1 = g1,2 = g2,3 = g3,4 = g4,5 = 30%). How would this affect its price, yield, and capital gains yield? Answer in words only.
c. What will CCC's yield and capital gains yield be once its period of nonconstant growth ends?
d. Of what interest to investors is the relationship over time between yield and capital gains yield?
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