Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today and will increase the dividend by 5.5 percent per year, thereafter. If the required return on this stock is 13.5 percent, what is the current share price? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current share price H
Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today and will increase the dividend by 5.5 percent per year, thereafter. If the required return on this stock is 13.5 percent, what is the current share price? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current share price H
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 22P
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![Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years because
the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today
and will increase the dividend by 5.5 percent per year, thereafter. If the required return on this stock is 13.5 percent, what is the current
share price?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Current share price
H](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F07af6234-9297-4352-a49a-df0144b85351%2F17e783b0-e634-48fa-89eb-9c4e132801ca%2F8ca8pk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years because
the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today
and will increase the dividend by 5.5 percent per year, thereafter. If the required return on this stock is 13.5 percent, what is the current
share price?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Current share price
H
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