Summarize and discuss the implications of the findings for the business or potential business transaction.

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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%.

1. Calculate the value of the stock today. - $25.23
2. Calculate P1^ and P2^. - P1^$26.93; P2^ $28.63
3. Calculate the dividend yield and capital gains yield for Years 1, 2, and 3. - Attachment

Year + + Dividend Yield $1.3225/$25.235.24% $1.52/$26.93 5.65% $1.72/$28.64 6.00% Capital Gains Yield ($26.93 - $25.23) / $25.23 6.74% ($28.64 - $26.93) / $26.93 - 6.35% ($30.36 - $28.64) / $28.64 6.00% Total Return 12% 12% 12% + Nm + Year + + Dividend Yield $1.3225/$25.235.24% $1.52/$26.93 5.65% $1.72/$28.64 6.00% Capital Gains Yield ($26.93 - $25.23) / $25.23 6.74% ($28.64 - $26.93) / $26.93 - 6.35% ($30.36 - $28.64) / $28.64 6.00% Total Return 12% 12% 12% + Nm +