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 $3.0000 dividend at that time (D3 =$3.0000), and believes the dividend will grow by 15.60% for the following two years (D4 and D5). However, after five years, she expects Goodwin's dividend to grow at a constant rate of 3.78% per year. 1) If Goodwin's required return is 12.60%, what is Goodwin's horizon value at the horizon date-- when constant growth begins? 2) What is Goodwin's current intrinsic value?

If investors expect a total return of 13.60%, 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?