**Taussig Technologies Corporation (TTC) Growth Analysis**Taussig Technologies Corporation (TTC) has been experiencing a growth rate of 18% annually. The growth is expected to continue for two more years before declining to a growth rate of 8%.**a. Stock Valuation and Yields**- **Current Stock Price Calculation** - Given: $ D_0 = \$2.10 $, $ r_s = 9\% $ - Current Stock Price: **\$2.48**- **Expected Dividend Yield during Year 1** - Yield: **8.10%**- **Capital Gains Yield during Year 1** - Yield: **8.10%****b. Impact of Extended Supernormal Growth (5 years)**Considering a supernormal growth period of 5 years rather than 2 years, the effect on price, dividend yield, and capital gains yield can be analyzed as follows:- **Option I** correctly states that the value of the stock will be higher for each year. The distribution between dividend yield and capital gains yield will differ during the extended growth period. **c. Post-Supernormal Growth Yields**Once the period of supernormal growth concludes, the following yields apply, unaffected by whether the period was 2 or 5 years:- **Dividend Yield:** **8.10%**- **Capital Gains Yield:** **8.00%**

Name: **Taussig Technologies Corporation (TTC) Growth Analysis**Taussig Tec
Uploaded: 2024-03-20T06:51:32.000Z
Channel: Bartleby
Description: **Taussig Technologies Corporation (TTC) Growth Analysis**Taussig Technologies Corporation (TTC) has been experiencing a growth rate of 18% annually. The growth is expected to continue for two more years before declining to a growth rate of 8%.**a.

Here,Super normal growth rate is 18%, ConstantGrowth Rate is 8%, D0 is $2.10rs is 9%

Business

Finance

Taussig Technologies Corporation (TTC) has been growing at a rate of 18% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 8%. a. If Do = $2.10 and rs = 9%, what is TTC's stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent. $ 2.48 What is its expected dividend yield at this time, that is, during Year 1? Do not round intermediate calculations. Round your answer to two decimal places. % 8.10 What is its capital gains yields at this time, that is, during Year 1? Do not round intermediate calculations. Round your answer to two decimal places. 8.10 % b. Now assume that TTC's period of supernormal growth is to last for 5 years rather than 2 years. How would this affect the price, dividend yield, and capital gains yield? I. Due to the longer period of supernormal growth, the value of the stock will be higher for each year. Although the total return will remain the same, the distribution between dividend yield and capital gains yield will differ for the duration of the supernormal growth period. II. Due to the longer period of supernormal growth, the value of the stock will be lower for each year. Although the total return will remain the same, the distribution between dividend yield and capital gains yield will differ for the duration of the supernormal growth period. III. Due to the longer period of supernormal growth, the value of the stock will be higher for each year. The total return as well as the distribution between dividend yield and capital gains yield will differ for the duration of the supernormal growth period. IV. Due to the longer period of supernormal growth, the value of the stock will be higher for each year. The total return as well as the distribution between dividend yield and capital gains yield will remain the same for the duration of the supernormal growth period. V. Due to the longer period of supernormal growth, the value of the stock will be lower for each year. The total return as well as the distribution between dividend yield and capital gains yield will differ for the duration of the supernormal growth period. I c. 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. Dividend yield: 8.10 Capital gains yield: 8 % %