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Supernormal Growth Synovec Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 4.5 percent, thereafter. If the required return is 10.5 percent and the company just paid a dividend of $3.15, what is the current share price?

Supernormal Growth Synovec Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 4.5 percent, thereafter. If the required return is 10.5 percent and the company just paid a dividend of $3.15, what is the current share price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 16P
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Supernormal Growth Synovec Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 4.5 percent, thereafter. If the required return is 10.5 percent and the company just paid a dividend of $3.15, what is the current share price?
Transcribed Image Text:Supernormal Growth Synovec Corp. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling off to a constant 4.5 percent, thereafter. If the required return is 10.5 percent and the company just paid a dividend of $3.15, what is the current share price?
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