Please provide the correct solution. Previously it has been partially incorrect, so this is a repost. Please double-check the yes or no question and the calculations. Stocks that don't pay dividends 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 (D₃ = $5.00000) and believes that the dividend will grow by 26.00000% for the following two years (D₄ and D₅). 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 Value Horizon value Q1. Answer here Current intrinsic value Q2. Answer here If investors expect a total return of 15.20%, what will be Goodwin’s expected dividend and capital gains yield in two years—that is, the year before the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY₃ and CGY₃.) Expected dividend yield (DY₃) Q3. Answer here Expected capital gains yield (CGY₃) Q4. Answer here 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 a large selection of profitable investment opportunities. Q5. Is this statement a possible explanation for why the firm hasn’t paid a dividend yet? No Yes Q1. Option 1 $99.91 or Option 2 $70.77 or Option 3 $83.26 or Option 4 $58.28 Q2. Option 1 $16.15 or Option 2 $54.01 or Option 3 $55.84 or Option 4 $50.66 Q3. Option 1 11.66% or Option 2 7.84% or Option 3 9.53% or Option 4 9.26% Q4. Option 1 7.36% or Option 2 14. 14% or Option 3 -3.01% or Option 4 18.73

Please provide the correct solution. Previously it has been partially incorrect, so this is a repost. Please double-check the yes or no question and the calculations. Stocks that don't pay dividends 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 (D₃ = $5.00000) and believes that the dividend will grow by 26.00000% for the following two years (D₄ and D₅). 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 Value Horizon value Q1. Answer here Current intrinsic value Q2. Answer here If investors expect a total return of 15.20%, what will be Goodwin’s expected dividend and capital gains yield in two years—that is, the year before the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY₃ and CGY₃.) Expected dividend yield (DY₃) Q3. Answer here Expected capital gains yield (CGY₃) Q4. Answer here 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 a large selection of profitable investment opportunities. Q5. Is this statement a possible explanation for why the firm hasn’t paid a dividend yet? No Yes Q1. Option 1 $99.91 or Option 2 $70.77 or Option 3 $83.26 or Option 4 $58.28 Q2. Option 1 $16.15 or Option 2 $54.01 or Option 3 $55.84 or Option 4 $50.66 Q3. Option 1 11.66% or Option 2 7.84% or Option 3 9.53% or Option 4 9.26% Q4. Option 1 7.36% or Option 2 14. 14% or Option 3 -3.01% or Option 4 18.73

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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Please provide the correct solution. Previously it has been partially incorrect, so this is a repost. Please double-check the yes or no question and the calculations.

Stocks that don't pay dividends 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 (D₃ = $5.00000) and believes that the dividend will grow by 26.00000% for the following two years (D₄ and D₅). 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	Value
Horizon value	Q1. Answer here
Current intrinsic value	Q2. Answer here

If investors expect a total return of 15.20%, what will be Goodwin’s expected dividend and capital gains yield in two years—that is, the year before the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY₃ and CGY₃.)

Expected dividend yield (DY₃)	Q3. Answer here
Expected capital gains yield (CGY₃)	Q4. Answer here

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 a large selection of profitable investment opportunities.

Q5. Is this statement a possible explanation for why the firm hasn’t paid a dividend yet?

Yes

Q1. Option 1 $99.91 or Option 2 $70.77 or Option 3 $83.26 or Option 4 $58.28

Q2. Option 1 $16.15 or Option 2 $54.01 or Option 3 $55.84 or Option 4 $50.66

Q3. Option 1 11.66% or Option 2 7.84% or Option 3 9.53% or Option 4 9.26%

Q4. Option 1 7.36% or Option 2 14. 14% or Option 3 -3.01% or Option 4 18.73

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