Goodwin Technologies is a relatively young company. Goodwin has been widly 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 $3.75 dividend at that time (D3 - $3.75), and believes the dividend will grow by 19.5% for the following two years (D4 and D5). However, after five years, she expects Goodwin's dividend to grow at a constant rate of 3.96% per year.

Goodwin has a required rate of return that is 13.2%

1. What is the horizon value at the horizon date - when constant growth begins?

2. What is current intrinsic value?

If investors expect a total return of 14.2% what will be Goodwin's expected dividend and capital gains yield in two years, the year before the firm begins paying dividends? Carry to four decimal places

3. What is expected dividend yield? (DY3)

9.23% 11.03% 8.89% or 7.39%

4. What is expected capital gains yield (CGY3)?

6.81% 13.13% 12.11% OR -3.43%

Say goodwins investment opportunities are poor. Is this statement possible for why the firm hasnt paid a dividend yet?

Yes or No