Synovec Corporation is expected to pay the following dividends over the next four years: $6.90, $17.90, $22.90, and $4.70. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 10 percent, what is the current share price?

The current price of the stock is $126.55

Explanation:

The current price per share can be calculated using the dividends discount model where by future dividends are discounted back to the present value to calculate the price of a stock. The formula that will be used for this stock is as follows,

P0 = D1 / (1+r)  +  D2 / (1+r)^2  +  D3  / (1+r)^3  +  D4 / (1+r)^4  +  

[ (D4 * (1+g)  /  (r - g)) /  (1+r)^4 ]

P0 = 6.9 / (1+0.1)  +  17.9 / (1+0.1)^2  + 22.9 / (1+0.1)^3  +  4.7 / (1+0.1)^4  +  

[ (4.7 * (1+0.06)  /  (0.1 - 0.06))  /  (1+0.1)^4 ]

P0 = $126.55

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.