0115. Nonconstant Growth Metallica Bearings, Inc., is a young startup company-No dividends will be paid on the stock over the next nine years because thefirm needs to plow back its earnings to fuel growth. The company will thenpay a dividend of $14 per share 10 years from today and will increase thedividend by 3.9 percent per year, thereafter. If the required return on thisstock is 11.5 percent, what is the current share price?

Calculation of current share price are as follows

Answered: 15. Nonconstant Growth Metallica…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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using excel please provide answer
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None
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"Finance3000" is a young start-up company. It will not pay any dividends on its stock over the next nine years because it plans to use retained earnings on expanding its business. "Finance3000" will pay a $14 per share dividend 10 years from today. After that the company will increase the dividend by 6 percent per year, in perpetuity. The required return on this stock is 12.5 percent. Calculate the value of one share of "Finance3000"'s stock. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price

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