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 $16 per share 10 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 10 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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 $16 per share 10 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 10 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text: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 $16 per share 10 years from today
and will increase the dividend by 5 percent per year thereafter. If the required return on
this stock is 10 percent, what is the current share price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
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