9. Stocks that don't pay dividends yetGoodwin 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 $5.50000 dividend at that time (D = $5.50000) and believes thatthe dividend will grow by 28.60000% for the following two years (D4 and Ds). However, after the fifth year, she expects Goodwin's dividend to grow ata constant rate of 4.38000% per year.Goodwin's required return is 14.60000%. 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 valueValueAssuming that the markets are in equilibrium, Goodwin's current expected dividend yield is, and Goodwin's capital gains yield isGoodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:

Formula to calculate Horizon value: Po = D0 * (1+g)/ (R-g) Where, P0 = Stock value D0 = Current…

Answered: 9. Stocks that don't pay dividends yet…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 25P

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9. 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 $2.00000 dividend at that time (D, = $2.00000) and believes that the dividend will grow by 10.40000% for the following two years (D, and D;). 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 Value Horizon value Current intrinsic value If investors expect a total return of 12.80%, what will be Goodwin's expected dividend and capital…
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 $1.25000 dividend at that time (D₃ = $1.25000) and believes that the dividend will grow by 6.50000% 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 3.36000% per year. Goodwin’s required return is 11.20000%. 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 Assuming that the markets are in…
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 $4.75000 dividend at that time (D₃ = $4.75000) and believes that the dividend will grow by 24.70000% 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 4.20000% per year. Goodwin’s required return is 14.00000%. 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 Current intrinsic value If investors expect a total return of 15.00%, what will be…
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 $4.25000 dividend at that time (D₃ = $4.25000) and believes that the dividend will grow by 22.10000% 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 4.08000% per year. Goodwin’s required return is 13.60000%. 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 Current intrinsic value If investors expect a total return of 14.60%, what will be Goodwin’s expected dividend and capital…
9. 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 $1.75000 dividend at that time (D, = $1.75000) and believes that the dividend will grow by 9.10000% for the following two years (D, and D.). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 3.48000% per year. Goodwin's required return is 11.60000 %. 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 Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is is Value…
9. 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 $3.50000 dividend at that time (D₃ = $3.50000) and believes that the dividend will grow by 18.20000% 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 3.90000% per year. Goodwin’s required return is 13.00000%. 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 (Number) Current intrinsic value (number) Assuming that the markets are in…
9. 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 Ds). 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 Horizon value Current intrinsic value Value
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 $4.25000 dividend at that time (D = $4.25000) and believes that the dividend will grow by 22.10000% for the following two years (D, and D₂). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.08000% per year. Goodwin's required return is 13.60000%. 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 Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is $69.27 $45.98 Goodwin has been very successful,…
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 $5.25000 dividend at that time (D₃ = $5.25000) and believes that the dividend will grow by 27.30000% 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 4.32000% per year. Goodwin’s required return is 14.40000%. 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 Current intrinsic value Assuming that the markets are in equilibrium, Goodwin’s current expected dividend yield is , and…
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 $4.50000 dividend at that time (D₃ = $4.50000) and believes that the dividend will grow by 23.40000% 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 4.14000% per year. Goodwin’s required return is 13.80000%. 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
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 $1.25000 dividend at that time (D₃ = $1.25000) and believes that the dividend will grow by 6.50000% 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 3.36000% per year. Goodwin’s required return is 11.20000%. 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 $18.69 Current intrinsic value $13.61 If investors expect a total return of 12.20%, what will be Goodwin’s expected dividend and…
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. 1. Term Value Horizon value Current intrinsic value 2. Assuming that the markets are in equilibrium, Goodwin’s current expected dividend yield…

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