Metallica Bearings Inc. 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 $11.70 per share dividend in 10 years and will increase the dividend by 6.4 percent per year thereafter. If the required return on this stock is 13.9 percent, what is the current share price? (Do not round intermediate calculations. Round the answer to 2 decimal places. Omit $ sign in your response.) Share price $
Metallica Bearings Inc. 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 $11.70 per share dividend in 10 years and will increase the dividend by 6.4 percent per year thereafter. If the required return on this stock is 13.9 percent, what is the current share price? (Do not round intermediate calculations. Round the answer to 2 decimal places. Omit $ sign in your response.) Share price $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Metallica Bearings Inc. 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 $11.70 per share dividend in 10 years and will increase the
dividend by 6.4 percent per year thereafter.
If the required return on this stock is 13.9 percent, what is the current share price? (Do not round intermediate calculations. Round
the answer to 2 decimal places. Omit $ sign in your response.)
Share price
$
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