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Excel Activity: Nonconstant Growth and Corporate Valuation Taussig Technologies Corporation ( TTC ) has been growing at a rate of 2 5 % per year
Excel Activity: Nonconstant Growth and Corporate Valuation
Taussig Technologies Corporation TTC has been growing at a rate of per year in recent years. This same growth rate is expected to last for another years, then decline to gn
The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.
Download spreadsheet Nonconstant Growth and Corporate Valuationfbfxlsx
If D $ and rs what is TTCs stock worth today? Round your answer to the nearest cent.
$ fill in the blank
per share
What are its expected dividend, and capital gains yields at this time, that is during Year Round your answers to two decimal places.
Dividend yield: fill in the blank
Capital gains yield: fill in the blank
Now assume that TTCs period of supernormal growth is to last for years rather than 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.
The price will
increase
to $ fill in the blank
per share.
The dividend yield will
decrease
to fill in the blank
The capital gains yield will
increase
to fill in the blank
What will TTCs dividend and capital gains yields be once its period of supernormal growth ends? Hint: These values will be the same regardless of whether you examine the case of or years of supernormal growth; the calculations are very easy. Round your answers to two decimal places.
Dividend yield: fill in the blank
Capital gains yield: fill in the blank
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:
Year
FCF $ $ $ $ $ $ $ $ $ $
After the th year, TTCs financial planners anticipate that its free cash flow will grow at a constant rate of Also, the firm concluded that the new product caused the WACC to fall to The market value of TTCs debt is $ million, it uses no preferred stock, it has zero nonoperating assets; and there are 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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