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 to decline to gn = 6%.

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

b. Now assume that TIC's period of supernomal growth is to last for 5 years rather than 2 years. How would this affect the price, dividend yield, and capital gains yield?

c. What will TTC's dividend and capital gains yirleds 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)

d. Of what interest to investors is the changing relationship between dividend and capital gains yields over time?