Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Turbo's last dividend was $1.15, and the required rate of return on the stock is 12%.

Complete the following calculations:

a) Calculate the value of the stock today.

b) Calculate P1^ and P2^.

c) Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.

c)

1a. Calculate the value of the stock today: 1. Calculate the PV of the dividends paid during the supernatural growth period: D13 1.15 x 1.15 1.3225 D2: D3- PV of Dividends 2. Find the PV of Turbo's stock price at the end of Year 3 P3A rs-g rs-g PV of P3A 3. Sum the two components to find the value of the stock today: S Value of current stock (Po) 1b. Calculate P1A and P2A. PIA- P2 1c. Calculate the dividend yields and capital gains yield for Years 1, 2, and 3 Dividend Yield Capital Gains Yield Year 1 $1.3225/$25.23 5.24% ($26.93 $25.23) $25.23 6.749% E Total Return 12%