Question

Taussig 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 (g₁ = g₂ = 20%).

If D₀ = $2.00, r_s = 10%, and g_n = 5%, what is TTC's stock worth today? What are its expected dividend yield and capital gains yield at this time?

2. Find the expected dividend yield.
Recall that the expected dividend yield is equal to the next expected annual dividend divided by the price at the beginning of the period.
Dividend yield =	D1	/	P0
Dividend yield =		/
Dividend yield =

Answer 1

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w v 4* ENG 04:32 26-02-2020 20 C1488 TAUSSIG DO = YEAR DIVIDEND GROWTH RATE 2.40 2.88 20% (2*(1+0.20)] 20% (2.4*(1+0.20)] 5% (2.88*(1+0.05)] 3.02 P2 = D3/(ke-g) P2 = 3.02/(0.10-0.05)= 60.48 1465 1466 1467 1468 1469 1470 1471 1472 1473 1474 1475 1476 1477 1478 1479 1480 1481 1482 1483 1484 1485 1486 1487 1488 1489 YEAR DIVIDEND + P2 2.400 63.36 P V FACTOR @ 10% 0.9091 0.8264 PV OF DIV + P3 2.18 52.36 2 PO = 54.55 4.40% DIVIDEND YIELD = D1/PO = 2.40/54.55 = CAPITAL GAIN YIELD = REQUIRED RETURN - DIVIDEND YIELD CAPITAL GAIN YIELD = 10% - 4.40% = 5.60% KE CAPM UTILITY, SHARPE, beta convexity DGM beta port future INDEX INTL CAP BUD SANDRINE LEASING PV, FV, ANNUITY DIR right clean YIEL...