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 6%

a) If D0=$1.6 and rs=10%, what is TTCs stock worth today? What are its expected

dividend, and capital gains yields at this time, that is, during Year 1?

b) What will TTCs dividend and capital gains yields be once its period of supernormal

growth ends?

c) Explain why investors are interested in the changing relationship between dividend

and capital gains yields over time.