Question: Nonconstant growth stock valuation
a) 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 = 7%.
If D0 = $1.30 and rs = 9.00%, what is TTC's stock worth today? Round your answer to the nearest cent. Do not round your intermediate calculations. $
What is its expected dividend yield at this time, that is, during Year 1? Round your answer to two decimal places. Do not round your intermediate calculations. %
What is its capital gains yields at this time, that is, during Year 1? Round your answer to two decimal places. Do not round your intermediate calculations. %
b) 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.)
Round your answers to two decimal places.