Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a...

Transcribed Image Text:

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 $5.00000 dividend at that time (D,= $5.00000) and believes that the dividend will grow by 26.00000% for the following two years (D, and D.). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.26000% per year. Goodwin's required return is 14.20000%. 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 accuracy of your calculations, do not round your intermediate calculations, but round all final answers to two decimal places. Term Horizon value Current intrinsic value Value Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is? Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: Goodwin has yet to record a profit (positive net income). . and Goodwin's capital gains yield is? Is this statement a possible explanation for why the firm hasn't paid a dividend yet? 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 $5.00000 dividend at that time (D,= $5.00000) and believes that the dividend will grow by 26.00000% for the following two years (D, and D.). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.26000% per year. Goodwin's required return is 14.20000%. 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 accuracy of your calculations, do not round your intermediate calculations, but round all final answers to two decimal places. Term Horizon value Current intrinsic value Value Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is? Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: Goodwin has yet to record a profit (positive net income). . and Goodwin's capital gains yield is? Is this statement a possible explanation for why the firm hasn't paid a dividend yet?

Answer rating: 100% (QA)

To determine Goodwin Technologies horizon value and current intrinsic value we need to calculate the ... View the full answer