You are a security analyst in ABC Investment Company Limited and are asked to analyse BBA Company, an IT employment agency that supplies computer programmers to financial institutions. BBAs beta coefficient is 1.2. The risk-free rate is 7% and the expected rate of return on the market is 12%. BBA just paid a dividend of $2.00 each share.

(c) Now, assume that BBAs dividends are expected to grow at 30% per year for the next 3 years, and then maintain a long-run constant growth rate of 6% per year in the foreseeable future.

(i) What is BBAs stock price today?

(ii) What are the expected dividend yield and capital gain yield today?

(iii) What are the expected dividend yield and capital gain yield in Year 3?