Goodwin Technologies is a relatively young company. Goodwin has been wildly successful, but it has yet to pay a dividend. An analyst has forecasted that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $2.0000 dividend at that time (D3 - $2.0000), and believes the dividend will grow by 10.40% for the following two years (D4 and D5). However, after five years, she expects Goodwin's dividend to grow at a constant rate of 3.54% per year. If Goodwin's required return is 11.80%, what is Goodwin's horizon value at the horizon date-- when constant growth begins?

Possible Horizon Answer is $30.56 2) What is Goodwin's current intrinsic value?

Possible Current Intrinsic Value Answers is : $21.74 3) If investors expect a total return of 12.80% What are Goodwin's current expected dividend and capital gains yield in TWO YEARS, the year before the firm begins paying dividends? Carry out dividend values to four decimal places.

HINT: You are at year 2 and the 1^st dividend is expected to be paid at the end of the year. Find DY3 AND CGY3.

Expected dividend yield Answer DY3 is : 9.20%

1.)) Expected capital gains yield Possible Answers: 5.25%, -4.01%, 2.85%, 11.72% NEED THIS ANSWER

2.)) Goodwin has been very successful, but it hasnt paid a dividend yet. It circulates a report to key investors that contain the following statement:

INVESTORS PREFER THE DEFERRED TAX LIABILITY THAT CAPITAL GAINS OFFER OVER DIVIDENDS.

Is this true?

Yes True.

No Not True

NEED THIS ANSWER