Taussig Technologies Corporation (TTC) has been growing at a rate of 19% per yea
ID: 2640364 • Letter: T
Question
Taussig Technologies Corporation (TTC) has been growing at a rate of 19% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 4%.
If D0 = $1.80 and rs = 13.00%, what is TTC's stock worth today? Round your answer to the nearest cent.
$
What is its expected dividend yield at this time, that is, during Year 1? Round your answer to two decimal places.
%
What is its capital gains yields at this time, that is, during Year 1? Round your answer to two decimal places.
%
Explanation / Answer
Taussig Technologies Corporation (TTC) has been growing at a rate of 19% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 4%.
If D0 = $1.80 and rs = 13.00%, what is TTC's stock worth today? Round your answer to the nearest cent.
TTC's stock worth today = 1.80*1.19/1.13 + 1.80*1.19^2/1.13^2 + (1.80*1.19^2*1.04/(13%-4%))/1.13^2
TTC's stock worth today = $ 26.96
What is its expected dividend yield at this time, that is, during Year 1? Round your answer to two decimal places.
expected dividend yield at this time = 1.80*1.19/26.96
expected dividend yield at this time = 7.95%
What is its capital gains yields at this time, that is, during Year 1? Round your answer to two decimal places.
TTC's stock worth i year from now = 1.80*1.19^2/1.13 + (1.80*1.19^2*1.04/(13%-4%))/1.13
TTC's stock worth i year from now= $ 28.32
capital gains yields at this time = (28.32-26.96)/26.96
capital gains yields at this time = 5.04 %
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