Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same supernormal
a. If D0 = $1.60, rs = 10%, and gL = 6%, then what is TTC’s stock worth today? What is its expected dividend yield and its capital gains yield at this time?
b. Now assume that TTC’s period of supernormal growth is to last another 5 years rather than 2 years (g1 = g2 = g3 = g4 = g5 = 20%). How would this affect its price, dividend yield, and capital gains yield? Answer in words only.
c. What will TTC’s dividend yield and capital gains yield be once its period of supernormal growth ends?
d. Of what interest to investors is the relationship over time between dividend yield and capital gains yield?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Question Posted: September 23, 2011 10:07:08