Question
Nonconstant growth stock valuation Taussig Technologies Corporation (TTC) has been growing at a rate of 14% per year in recent years. This same growth rate
Nonconstant growth stock valuation
Taussig Technologies Corporation (TTC) has been growing at a rate of 14% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 4%.
A. If D0 = $2.30 and rs = 12.00%, what is TTC's stock worth today? Round your answer to the nearest cent.
B. What is its expected dividend yield at this time, that is, during Year 1? Round your answer to two decimal places.
C. What is its capital gains yields at this time, that is, during Year 1? Round your answer to two decimal places.
What will TTC's 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 2 or 5 years of supernormal growth; the calculations are very easy.) Round your answers to two decimal places. Dividend yield? Capital gains yield?
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