Question $18$

Supernormal Growth $[$ LO$1]$ Synovec Co$.$ is growing quickly. Dividends

are expected to grow at a rate of $30$ percent for the next three years, with

the growth rate falling off to a constant $4$ percent thereafter. If the required

return is $10$ percent, and the company just paid a dividend of $$2\mathrm{.}65,$ what

is the current share price?

$ln\frac{g}{sin3}$

Dividend growth rate $-$ period $1$

Supernatural growth years

Dividend growth rate $-$ period $2$

Required return

Dividend