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Item 18

Item 18 2.94 points

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 10 percent, and the company just paid a dividend of $2.20, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

I don't understand what I am doing incorrect. $103.67 in not right. Please explain.

0 Dividend $ PV of Dividends $ 2.20 2.20 $ $ 1 2.64 2.40 $ $ 3.17 2.62 $ $ 3 3.80 1 $ 2.86 $ 4.56 3.12 stock price (74) =(N27*(1.05))/(0.1-0.05) stock price +pv of dividends $ 103.67 $ 7.87