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a . If D 0 = $ 1 . 1 0 and r S = 1 0 % , what is TTC ' s stock

a. If D0=$1.10 and rS=10%, what is TTC's stock worth today? Round your answer to the nearest cent.
What are its expected dividend, and capital gains yields at this time, that is, during Year 1? Round your answers to two decimal places.
b. Now assume that TTC's period of supernormal growth is to last for 5 years rather than 2 years. How would this affect the price, dividend yield, and capital gains yield? Round your answer for the price to the nearest cent and for the dividend yield and capital gains yield to two decimal places.
c. What will TTC's dividend and capital gains yields be once its period of supernormal growth ends?
TTC recently introduced a new line of products that has been wildly successful. On the basis of this success and anticipated future success, the following free cash flows were projected (in millions): After the 10th year, TTC's financial planners anticipate that its free cash flow will grow at a constant rate of 5%. Also, the firm concluded that the new product caused the WACC to fall to 9%. The market value of TTC's debt is $1,000 million, it uses no preferred stock, it has zero nonoperating assets; and there are 25 million of common stock outstanding. Use the corporate valuation model to value the stock. Round your answer to the nearest cent.
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