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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

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 $3.2500 dividend at that time (D_3 = $3.25000) and believes that the dividend will grow by 16.90% for the following two years (D_4 and D_s). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 3.84% per year. Goodwin's required return is 12.80%. Fill in the following chart to determine Goodwin's horizon value at the horizon date-when constant growth begins-and the current intrinsic value. Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is _____, and Goodwin's capital gains 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: Is this statement a possible explanation for why the firm hasn't paid a dividend yet? No Yes

 

Apr 04 2020 View more View Less

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