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Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to
Goodwin Technologies, 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 $4.00 dividend at that time (D_3 = $4.00) and believes that the dividend will grow by 20.80% for the following two years (D_4 and D_5). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.02% per year. Goodwin's required return is 13.40%. Fill in the following chart to determine Goodwin's horizon value at the horizon date when constant growth begins and the current intrinsic value. If investors expect a total return of 14.40%, what will be Goodwin's expected dividend yield and capital gains yield in two years that is, the year before the firm begins paying dividends
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