Taussig Technologies Corporation (TTC) has been growing at a rate of 20% peryear in recent years. This same growth rate is expected to last for another 2 years.a. If D₂ = $1.60, r = 10%, and g. - 6%, what is TIC's stock worth today? What are its expected dividendyield and capital gains yield at this time?1. Find the price today.D₁T.BLYearDividendPV of dividends$1.7455+1.9041$50.4595$54.1091 - P.Dividend yield=Dividend yield-Dividend yield-$1.6010.0%20%$1.60P₁P₁Cap. Gain yield-Expected returnCap. Gain yieldCap. Gain yield-P₁D₁$1.9203.55%Cap. Gain yieldCap. Gain yieldCap. Gain yield2. Find the expected dividend yield.Recall that the expected dividend yield is equal to the next expected annual dividend divided by the price atthe beginning of the period.20%10.0%6.45%-Short-run g; for Years 1-2 only.Long-run g; for Year 3 and all following years.-$1.923. Find the expected capital gains yield.The capital gains yield can be calculated by simply subtracting the dividend yield from the totalexpected return.(P₁-P)T12$2.30Alternatively, we can recognize that the capital gains yield measures capital appreciation, hence solve forthe price in one year, then divide the 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 values of the terminal value and secondyear dividend to time period one.P₁61.0560 - Terminal value P11Po$54.109Dividend yield3.55%$2.44+(1+r)+2.4422P₁4.0%D₁

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Description: Taussig Technologies Corporation (TTC) has been growing at a rate of 20% peryear in recent years. This same growth rate is expected to last for another 2 years.a. If D₂ = $1.60, r = 10%, and g. - 6%, what is TIC's stock worth today? What are its exp

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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. a._ If D₂ = $1.60, r = 10%, and g. - 6%, what is TIC's stock worth today? What are its expected dividend yield and capital gains yield at this time? 1. Find the price today. D₂ Year Dividend PV of dividends $1.7455 1.9041 $50.4593 $1.60 10.0% 20% 6% $1.60 $54.1991 - P. Short-rung for Years 1-2 only. Long-rung: for Year 3 and all following years. $1.92 $2.30 $2.44 61.0560 - Terminal value = P₂ - 2.4422 4.0% 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.

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. a._ If D₂ = $1.60, r = 10%, and g. - 6%, what is TIC's stock worth today? What are its expected dividend yield and capital gains yield at this time? 1. Find the price today. D₂ Year Dividend PV of dividends $1.7455 1.9041 $50.4593 $1.60 10.0% 20% 6% $1.60 $54.1991 - P. Short-rung for Years 1-2 only. Long-rung: for Year 3 and all following years. $1.92 $2.30 $2.44 61.0560 - Terminal value = P₂ - 2.4422 4.0% 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.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 21P

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