Question

1- Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Turbo's last dividend was $1.15, and the required rate of return on the stock is 12%.

Complete the following calculations:

- Calculate the value of the stock today.
- Calculate P1^ and P2^.
- Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.

** Please be as detailed and show answer in Excel.

Answer #1

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