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I need help solving the following question. Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at
I need help solving the following question.
- Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Turbo's last dividend was $1.15, and the required rate of return on the stock is 12%.
Complete the following calculations:
- Calculate the value of the stock today.
- Calculate P1^ and P2^.
- Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.
I am having the most difficulty trying to solve #2. I cannot spend any more time on it or I will not have my assignments completed on time.
Thank you for your help.
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