Goodwin has a large selection of profitable investment opportunities.Is this statement a possible explanation for why the firm hasn't paid a dividend yet?O NoYes Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin islikely to pay its first dividend three years from now. She expects Goodwin to pay a $2.00000 dividend at that time (D-$2.00000) and believes thatthe dividend will grow by 10.40000% for the following two years (Ds and Ds). However, after the fifth year, she expects Goodwin's dividend to grow ata constant rate of 3,54000% per year.Goodwin's required return is 11.80000%. Fill in the following chart to determine Goodwin's horizon value at the horizon date (when constant growthbegins) and the current intrinsic value. To increase the accuracy of your calculations, do not round your intermediate calculations, but round all finalanswers to two decimal places.TermHorizon valueCurrent intrinsic valueValueYAssuming that the markets are in equilibrium, Goodwin's current expected dividend yield isand Goodwin's capital gains yield isGoodwin has been very successful, but it hasn't paid a dividend yet. It orculates a report to its key investors containing the following statement:Goodwin has a large selection of profitable investment opportunities.

Dividend in year 3(D3)=$2Required return = 11.80%1st stage growth rate = 10.40%2nd stage growth rate…

Answered: Goodwin has a large selection of…

Goodwin has a large selection of profitable investment opportunities. Is this statement a possible explanation for why the firm hasn't paid a dividend yet? O No O Yes

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Corporate Ethics

Ethics refers to the moral values and principles that guide an individual. Corporate ethics refers to the moral behavior of a company and its employees while conducting business. Business ethics is another name for corporate ethics. Business ethics reflects the purpose of doing the business. Business ethics is the distinction between what is right and wrong in the workplace and the selection of the right set of actions. Every corporate entity follows business ethics to a large extent in order to survive and compete successfully in the market. Corporate entities that strictly adhere to business ethics gain the trust of their stakeholders and thus gain more customers. An organization follows compliance, i.e., following certain business policies, rules, procedures, and practices to deal with the problem arising from the business environment. Business ethics also ensures that they meet compliance requirements as it was connected with the activities of an organization.

Question

Goodwin has a large selection of profitable investment opportunities.
Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
O No
Yes

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 $2.00000 dividend at that time (D-$2.00000) and believes that
the dividend will grow by 10.40000% for the following two years (Ds and Ds). However, after the fifth year, she expects Goodwin's dividend to grow at
a constant rate of 3,54000% per year.
Goodwin's required return is 11.80000%. 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
Y
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 orculates a report to its key investors containing the following statement:
Goodwin has a large selection of profitable investment opportunities.

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A firm is planning to borrow money to make an equity repurchase to increase its stock price. It is basing its analysis on the fact that there will be fewer shares outstanding after the repurchases, and higher earnings per share. There are no taxes. a. Will earnings per share always increase after such an action? Explain.b. Will the higher earnings per share always translate into a higher stock price? Explain.c. Under what conditions will such a transaction lead to a higher price?
Dividend policy and company value: You have just encountered two identical companies with identical investment opportunities, as well as the ability to fund these opportunities. You have found that one of the companies has just announced an introductory dividend policy, whereas the other has continued with a no-dividend policy. Which of the two companies is worth more? Explain
If the Modigliani and Miller hypothesis about dividends is correct, and if one found a group of companies which differed only with respect to dividend policy, which of the following statements would be most correct? Group of answer choices None of these statements is true. All of these statements are true. The total expected return, which in equilibrium is also equal to the required return, would be higher for those companies with lower payout ratios because of the greater risk associated with capital gains versus dividends. If the expected total return of each of the sample companies were divided into a dividend yield and a growth rate, and then a scatter diagram (or regression) analysis were undertaken, then the slope of the regression line (or b in the equation D1/P0 = a + b(g)) would be equal to +1.0. The residual dividend model should not be used, because it is inconsistent with the MM dividend hypothesis.
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Charles Underwood Agency Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $17,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,610 million, and net operating working capital (NOWC) is expected to increase by $30 million. How much free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year? $14,820 million $19,980 million $321,693 million $14,760 million…
M-M theroy with perfect market suggests that divident payment: A.It dependes on the company's capital structure and retained earnings B.Has a positive impact on the value of a firm C.Has a negative impact on the value of a firm D.Has no impact on the value of a firm
The _______________theory hypothesizes that the amount of dividends should not be the focus of the company, but that the company should simply declare a dividend from the earnings not currently needed for earmarked projects. This theory leads to erratic and unpredictable dividends.
Give typing answer with explanation and conclusion The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to a. Maximize its expected EPS. b. Minimize the chances of losses. c. Maximize the stock price on a specific target date. d. Maximize its expected total corporate income. e. Maximize the stock price per share over the long run, which is the stock's intrinsic value.

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