Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 11 years becausethe 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 todayand 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 currentshare price?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Current share priceH

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

Answered: Metallica Bearings, Incorporated, is a…

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

See similar textbooks

Similar questions

using excel please provide answer
OZ Minerals Ltd. is a young start-up company. No dividends will be paid on the stock over the next 9 years because the firm needs to plow back (reinvest) its earnings to fuel growth. The company will pay a dividend of $32 per share 10 years from today and will increase the dividend by 5 per cent per year thereafter. If the required return on this stock is 16 per cent, what is the current share price?
New Gadgets, Incorporated, currently pays no dividend but is expected to pay its first annual dividend of $4.90 per share exactly 7 years from today. After that, the dividends are expected to grow at 3.5 percent forever. If the required return is 11.3 percent, what is the price of the stock today?
Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next 14 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $8 per share 15 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 11 percent, what is the current share price? Multiple Choice O O O $27.87 $31.86 $30.93 $32.48 $29.39
Metallica Bearings, Inc., is a youngstart-up company. No dividends will be paid on the stock over the next nine yearsbecause the firm needs to plow back its earnings to fuel growth. The company will pay a$17 per share dividend 10 years from today and will increase the dividend by 3.9 percentper year thereafter. If the required return on this stock is 12.5 percent, what is the currentshare price?
Antiques 'R' Us is a mature manufacturing firm. The company just paid a dividend of $10.80, but management expects to reduce the payout by 5.25 percent per year, indefinitely. If you require a return of 9 percent on this stock, what will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock over the next 8 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $14.00 per share 9 years from today and will increase the dividend by 5.75 percent per year, thereafter. If the required return on this stock is 13.75 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
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 10 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.50 per share 11 years from today and will increase the dividend by 5.25 percent per year thereafter. If the required return on this stock is 13.25 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
The earnings of Eastern Corp. are expected to grow at an annual rate of 12% over the next 5 years and then slow to a constant rate of 8% per year. The company currently pays a dividend of $0.36 per share. What is the value of the company’s stock to an investor who requires a 14% rate of return? If the stock has a market price of $15, do you buy it ?
Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $11.00, but management expects to reduce the payout by 4.75 percent per year, indefinitely. If you require a return of 10 percent on this stock, what will you pay for a share today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price
"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
Southern Power just paid an annual dividend of $7.1 per share. Because of increasing competition from home solar installations, the dividend is expected to shrink by 3% per year. The required rate of return is 8%. What is the value of the stock?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS