9. Stocks that don't pay dividends yet Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwinis Ukely to pay its first dividend three years from now. She expects Goodwin to pay a $1.50000 dividend at that time (D. - $1.50000) and believes that the dividend will grow by 7.80000% for the following two years (D, and D). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 3.42000% per year, Goodwin's required retum is 11.40000%. Plin the following chart to determine Goodwin' horizon value at the horizon date (when constant growth begin) and the current intrindile value. To Increate the accuracy of your calculations, do not round your intermediate calculations, but found all nina answers to two decimal places Value Term Horizon value Current intrinele value Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement Goodwin' vestment opportunities are poor Is this statement possible explanation for why the firm hasn't paid a dividend yet? NO Yes diculation erm Value Horizon value Current intrinsic value $27.11 assuming that the markets $15.81 ilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yiel $22.59 Goodwin has been very sud $19.20 t it hasn't paid a dividend yet. It circulates a report to its key investors containing the following stateme Goodwin's Investment opportunities are poor. Is this statement nasihi diculations, but round all in Value Term Horizon value Current Intrinsic value Assuming that the markets $15.23 ilibrium, Goodwin's current expected dividend yield is $16.32 and Goodwin's capital gains yield is Goodwin has been very suc $16.77 $8.15 but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: Goodwin's Investment opportunities are poor Is this statement possible explanation for why the firm hasn't paid a dividend yet? No Ves c value the markets are in equlibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is 9.19% been very successful, but it hasn't paid a dividend yet. It circulates a report to 7.72% frestors containing the following statement: 9.91% win's Investment opportunities are poor. 0.0096 statement a possible explanation for why the firm hasn't paid a dividend yet? No Yes Grace are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yie 16.32% sen very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following stateme 22.59% 11.40000% Investment opportunities are poor, 13.1671% Is this statement a possible explanation for why the firm hasn't paid a dividend yet? Yes Gr Now & Con
