Goodwin Technoligies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $3.7500 dividend at that time (d₃ = $3.7500) and believes that the dividend will grow by 19.50% for the following two years (D₄ and D₅). However, after the fifth year, she expects Goodwin's dividend to grow at a onstant rate of 3.96% per year.

Goodwin's required return is 13.20%. Fill in the following chart to determine Goodwin's horizon value at the horizon date-- when constant growth begins- and the current intrinsic value. To increase the accracy of your calculations, carry the dividend values to four decimals places.

Term	Value
Horizon Value	a. $42.18 b. $60.25 c. $51.21 D. $72.30
Current Intrinsic Value	a. $13.20 b. $38.02 c. $41.90 d. $40.61

If investors expect a total return of 14.20%, what will be Goodwins expected dividend and capital gains yield in two years -that is, the year before the firm begins paying dividends? Again, remeber to carry out the dividend valus to four decimal places. (HINT: you are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY₃ and CGY₃₎

Expected dividend yield (DY3)	a. 7.36% b. 9.23% c. 11.03% d. 8.89%
Expected Capital gins yield (CGY3)	a, 6.81% b. -3.43% c. 13.13% d. 12.11%

Goodwin has been very successful, but it hasn't paid a divident yet. It circulates a report to its key investorss containing the following statement:

Investors prefer the deferred tax liability that capital gains offer over dividends.

Is this statment a possbile explaination for why the firm hasnt paid a divident yet?

a. yes

b. no