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 g_n = 6%.

(a) If D₀ = $1.60 and r_s = 10%, what is TTC's stock worth today? What are its expected dividend, and capital gains yields at this time, that is, during Year 1?

(b) What will TTC's dividend and capital gains yields be once its period of super-normal growth ends?

(c) Explain why investors are interested in the changing relationship between dividend and capital gains yields over time.