Question
Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same growth rate is expected to last
Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 6%.
(1) What will TTC's dividend and capital gains yields be once its period of super-normal growth ends? (Hint: These values will be the same regardless of whether you examine the case of 2 or 5 years of super-normal growth; the calculations are very easy.)
(2) Explain why investors are interested in the changing relationship between dividend and capital gains yields over time.
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