Question
Taussig Technologies Corporation (TTC) has been growing at a rate of 19% per year in recent years. This same growth rate is expected to last
Taussig Technologies Corporation (TTC) has been growing at a rate of 19% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 7%.
If D0 = $2.80 and rs = 11%, what is TTC's stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent. $
What is its expected dividend yield at this time, that is, during Year 1? Do not round intermediate calculations. Round your answer to two decimal places. %
What is its capital gains yields at this time, that is, during Year 1? Do not round intermediate calculations. Round your answer to two decimal places. %
Now assume that TTC's period of supernormal growth is to last for 5 years rather than 2 years. How would this affect the price, dividend yield, and capital gains yield?
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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