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eBook Taussig Technologies Corporation (TC) has been growing at a rate of 15% per year in recent years. This same growth rate is expected to
eBook Taussig Technologies Corporation (TC) has been growing at a rate of 15% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn=6%. a. If D0=$1.60 and rs=12%, what is Cs stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent. What is its expected dividend yield at this time, that is, during Year 1? Do not round intermediate calculations. Round your answer to two decimal places. % What is its capital gains yields at this time, that is, during Year 1 ? Do not round intermediate calculations. Round your answer to two decimal places. % b. Now assume that C '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? -Select- Dividend yield: Capital gains yield: d. Of what interest to investors is the changing relationship between dividend and capital gains yields over time? I. It is of no interest to investors whether they receive dividend income or capital gains income, since taxes on both types of income can be delayed until the stock is sold. III. Some investors need cash dividends, while others would prefer growth. Also, investors must pay taxes each year on the capital gain during the year, while taxes on the dividends can be delayed until the stock is sold. IV. It is of no interest to investors whether they receive dividend income or capital gains income, since both types of income are always taxed at the same rate. V. It is of no interest to investors whether they receive dividend income or capital gains income, since taxes on both types of income must be paid in the current year. -Select
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