What is the dividend yield and the capital gains yield

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Normal tea companies grow at a constant rate of 5%. However, Taya's Tea Company has tested a brand new tea that will lead to significant growth. The current dividend is $3.0, but over the next two years it will grow by 25%. By year 3, expectations are that Taya's Tea Company will revert to the mean with 4% growth. Taya's current beta is 2, with a risk-free rate of 2%, and the market risk premium at 5%. What is Taya's Tea company expected dividend stream over the next three years? What is the current stock price? What is the dividend yield, the capital gains yield, and the total return during the first year? If Taya's shares were trading at $10 per share, would you buy?

Reference no: EM13949056

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