The current share price of Synovec Corporation per share would be about $256,500, we can calculate the present value of the expected dividends using the constant growth model.
To find the current share price of Synovec Corporation, we can calculate the present value of the expected dividends using the constant growth model. The constant growth model formula is P = D / (r - g), where P is the current share price, D is the dividend, r is the required return, and g is the growth rate.
In this case, the dividend for the next three years will grow at a rate of 28%, and then the growth rate will fall to a constant 7.9% thereafter. The required return is 16%. We can use the formula to calculate the current share price:
P = 3.70 / (0.16 - 0.28) + (3.70 * (1 + 0.28) / (0.16 - 0.28)²) + (3.70 * (1 + 0.28)² / (0.16 - 0.28)³) + (3.70 * (1 + 0.28)³ / (0.16 - 0.079))
Simplifying the equation will give us the current share price.
The price per share would be about $256,500.