Synovec Company is growing quickly. Dividends are expected to grow at a rate of 20percent for the next 3 years, with the growth rate falling off to a constant 7 percentthereafter.If the required return is 12 percent and the company just paid a $1.90 dividend. what isthe current share price?

Growth Rate for next 3 year = g3 = 20%Growth Rate after next 3 year = g = 7%Required Rate of Return…

Answered: Synovec Company is growing quickly.…

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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Synovec Company is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next 3 years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 12 percent and the company just paid a $1.90 dividend. what is the current share price?