Question
Goodwn tech , a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely
Goodwn tech , 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 $3.00 dividend at that time and believes that the dividend will grow by 15.6% for the following two years. However, after the fifth year, she expects Goodwin dividend to grow at a constant rate of 3.78% per year.
Assuming that the market are in equilibrium, Goodwins curent expected dividend is _______ and Goodwins capital gains yield is_____?
Goodwin required a 12.60%.
Goodwin circulates a report to its key investores containing the following statement:
Investors prefer the deferred tax liability that capital gains offer over dividends.
Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
Yes or no
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started