Expected diidend and capital gains yield in two years

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Reference no: EM131452420

Goodwin Technologies, a relatively young compay, 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 Goodin to pay a $5.2500 dividend at that time (D3=$5.2500) and believes that the dividend will grow by 27.30% 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 4.32% per yeear.

Goodwin's required return is 14.40%. 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, carry the dividend values to four decimal places.

If investors expect a total return of 15.40%, what will be Goodwin's expected diidend and capital gains yield in two years-- that is, the year before the firm begins paying dividens?

Reference no: EM131452420

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