B E C D F G H 1 Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same growth rate is 2 expected to last for another 2 years (g1 = 92 = 20%). 4. a. If Do = $2.00, rs = 10%, and gn = 5%, what is TTC's stock worth today? What are its expected dividend yield and capital gains 5 yield at this time? 21 3. Find the expected capital gains yield. 22 The capital gains yield can be calculated by simply subtracting the dividend yield from the total expected return. 24 Cap. Gain yield= Expected return Dividend yield 25 Cap. Gain yield= 26 Cap. Gain yield= 27 Alternatively, we can recognize that the capital gains yield measures capital appreciation, hence solve for the price in one year, then divide the 28 change in price from today to one year from now by the current price. To find the price one year from now, we will have to find the present 29 values of the terminal value and second year dividend to time period one. 31 P + D (1 + r) Pi + P1 (P1-P) 39 Cap. Gain yield= 40 Cap. Gain yield= 41 Cap. Gain yield= B E C D F G H 1 Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same growth rate is 2 expected to last for another 2 years (g1 = 92 = 20%). 4. a. If Do = $2.00, rs = 10%, and gn = 5%, what is TTC's stock worth today? What are its expected dividend yield and capital gains 5 yield at this time? 21 3. Find the expected capital gains yield. 22 The capital gains yield can be calculated by simply subtracting the dividend yield from the total expected return. 24 Cap. Gain yield= Expected return Dividend yield 25 Cap. Gain yield= 26 Cap. Gain yield= 27 Alternatively, we can recognize that the capital gains yield measures capital appreciation, hence solve for the price in one year, then divide the 28 change in price from today to one year from now by the current price. To find the price one year from now, we will have to find the present 29 values of the terminal value and second year dividend to time period one. 31 P + D (1 + r) Pi + P1 (P1-P) 39 Cap. Gain yield= 40 Cap. Gain yield= 41 Cap. Gain yield=