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 D 0 = $ 1.60 and r s = 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. Now assume that TTCs 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? c. What will TTCs 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.) d. TTC recently introduced a new line of products that has been wildly successful. On the basis of this success and anticipated future success, the following free cash flows were projected:

After the 10th year, TTCs financial planners anticipate that its free cash flow will grow at a constant rate of 6%. Also, the firm concluded that the new product caused the WACC to fall to 9%. The market value of TTCs debt is $1,200 million, it uses no preferred stock, it has zero nonoperating assets; and there are 20 million shares of common stock outstanding. Use the corporate valuation model to value the stock.