14. Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $10 per share 10 years from today and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price? Hint: Po = D₁ D2 D3 + + (1+R)¹ (1+R)² (1+R) ³ ++ Dt Pt + (1+R)t (1+r)t . where P = Dex(1+g)_ Dt+1 R-g R-g

Q: Mica Beatings, corporated, is a young startup company. No dividends will be paid on the stock over…

A: In the given case, we have provided the dividend for the year 10 and thereafter growth rate of…

Q: metallica bearing incorported is a startup company. no dividends will be paid on the stock over 10…

A: b) Calculation of bond price now  PV=FV/(1+𝑟)𝑛 =$184.375/(1+0.1325)^10 =184.375/3.47042 =$53.13…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: Data given:First dividend in Year 10 (D10) =$14Dividend growth rate (g)=3.9%Required return…

Q: Pacific Enterprises Inc. stock does not now pay dividends. Investors expect that it will begin…

A: In this question we need to find out Value of the stock today based on dividend discount model. We…

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: Step 1: The calculation of the current price of the share AB1Dividend on 12th year (D12) $    16.25…

Q: Top Secrets stronghold company  (agossipcompany) has fallen on hardtimes. Management expects to pay…

A:

Q: what is the current 'share price?

A: Introduction: The term share price can be defined as the price at which the stock is currently…

Q: What is the price of the stock 10 years from today? AND  What is the current share price?

A: Given information: Dividend in year 11 (D11) = $14.75 Stable constant growth rate after year 11 (g)…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: a) Calculation of bond price in year 10 Stock price=D11/r−g=14.75/0.1325−0.0525=184.375 Therefore,…

Q: what is its current share price?

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Check my work Metallica Bearings, Incorporated, is a young startup company. No dividends will be…

A: Dividend in year 9 is $15.25Growth rate is 5.75%Required return is 13.75%To Find:Current Share price

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: A stock is a capital market security that offers the investor an ownership interest in the company,…

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: Dividend in year 10 is $15.75Growth rate is 5.%Required return is 13.00%To Find:Current Share price

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: DDM dividend discount model is used to the predict the price of stock based on dividend and growth…

Q: "Finance3000" is a young start-up company. It will not pay any dividends on its stock over the next…

A: The Dividend Discount Model (DDM), commonly referred to as the Gordon Growth Model, is a technique…

Q: Premier, Incorporated, has an odd dividend policy. The company has just paid a dividend of $4 per…

A: Dividend discounting model is a method of finding out the current value of securities after…

Q: Staton - Smith Software is a new start-up company and will not pay dividends for the first five…

A: Dividend discount model is a valuation metric used to evaluate the worth of the stock by considering…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: Dividend in year 14 (D14) = $ 14 Growth rate after 14 years (g) = 4% Required return (r) = 9% Period…

Q: Software company is a new start-up company and wil not pay dividends for the first five years of…

A: a) Dividend for Year 6 (D6) would be $2.50 which will grow at a rate of 3% for the next 20 years.…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: Current market Prices refers to the price at which shares are currently trading in the market. Price…

Q: Forral Company has never paid a dividend. But, the company plans to start paying dividends in two…

A: To determine the market value today, we need to discount back the dividend in year 2 and the…

Q: Industrial Light and Magic, Inc., is a young start-up company. dividends will be paid on the stock…

A: Current dividend = d0 = $1.5 Time = 7 years Growth rate = g = 3.5% Required rate of return = r = 14%

Q: tyles Inc. is a young startup company, No dividends will be paid on the stocks in the next 9 years.…

A: Calculate the stock price for the 9th year or P9 as follows : P9=Next Dividend (D10 )Required Rate…

Q: Apocalyptica Corp. pays a constant $28 dividend on its stock. The company will maintain this…

A: Annual dividend (D) = $28Required return (r) = 0.06Period (n) = 10 yearsCurrent share price = ?We…

Q: Staton-Smith Software is a new start-up company and will not pay dividends for the first five years…

A: The Dividend Growth Model is a way of valuing the stock price.Here, the stock price is determined by…

Q: orse and Buggy Incorporated is in a declining industry. Sales, earnings, and dividends are all…

A: The expected return in back alludes to the expected pick up or misfortune from speculation,…

Q: Stock analysts believe that Bryson Corporation will not be able to pay a dividend until three years…

A: Stocks are issued by companies as a measure of raising funds through the general public and…

Q: Company does not currently pay dividends.  the company will start with a 0.50 dividend at the end of…

A: First dividend of $0.50 is paid in Year 3 (D3), it will grow at 10% for the next 6 years, that is…

Q: Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8…

A: Current share price of the stock can be determined by calculating the present value of the cash flow…

Q: Consolidated Industries is growing quickly. Dividends are expected to grow at a 15 percent rate for…

A: Growth rate for 3 years = G = 15% Constant growth rate after 3 years = g = 1.5% Required rate of…

Q: Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the…

A: Share price refers to the price at which the shares can be bought or sold in the stock market among…

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: price 11 years from today=D12/(Required rate - Growth rate).=$12.50/(13.5%−5.5%).=$12.50/8%=$156.25

Q: Amalgamated Industrial is growing quickly. Dividends are expected to grow at a 10 percent rate for…

A: When dividends grow at a constant rate g, the formula for the price of a stock using the Dividend…

Q: Fit Corp, is expected to pay the following dividends over the next few years: $14 in year 1. $10 in…

A: Dividend in year 1 = d1 = $14 Dividend in year 2 = d2 = $10 Dividend in year 3 = d3 = $0 Dividend in…

Q: Q6. Happy days is a young start-up company. No dividends will be paid on the stock over the next 5…

A: No Dividend paid for next 5 years  Dividend paid in 6th year = $12 Growth rate = 3%  Required rate…

Q: Current share price

A: Price of the shares is the PV of all future dividends discounted at the required return

Q: Urban Utilities, Inc. has an outstanding common stock that is not growing.  The firm has been paying…

A: solution given Annual dividend $4 per share Required rate of return 8% Growth rate…

Q: XYZ just went public. As a growing firm, it is not expected to pay a dividend for the first five…

A: Price of stock may be calculated using dividend discount method with following formula   Present…

Q: Buggy a. If r= 15% and DIV₁ = $8, what is the value of a share? Note: Do not round intermediate…

A: DDM is the dividend discount model that is used for calculating the stock price based on the present…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: Price 9 years from today=D10/(Required return-Growth rate)=18/(0.13-0.06)=$257.142857142857143=…

Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…

A: Gordon Growth Model also known as the Dividend Discount Model, is a method used to value a stock by…

Q: Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the…

A: Dividend in Year 10 = d10 = $9Growth rate = g = 5%Required Rate of Return = r = 13%

Q: Gamma Corporation is a mature firm. The company paid a dividend of $5, and it will grow at 10% for…

A: Growth rate for first two years 10% Growth rates for perpetuity -5% Current Dividend $5…

Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over…

A: Dividend after 10 years (D10) = $11 Growth rate (g) = 4% Required return (r) = 12% Period without…

Q: Staton-Smith Software is a new start-up company and will not pay dividends for the first five years…

A: Dividend Discount Model refers to the process of discounting the dividends received over the period…

Q: Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the…

A: Where,P0 = Stock valueD0 = Current dividendg = growth rate in decimal format D0 ( 1 + g) =Expected…

Dividend Valuation

Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.

Dividend Discount Model

Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.  

Capital Gains Yield

It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.

Stock Valuation

In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.