NONCONSTANT GROWTH STOCK VALUATION AND CORPORATE VALUATIONTaussig 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 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, that is, during Year 1?b. Now assume that TTC’s period of supernormal growth is to last for 5 years rather than 2 years. Calculate the price, dividend yield, and capital gains yield for Year 1.c. 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.)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:

1 Answer

Get Your Answer From a Professional Tutor