Problemmetallica bearings inc is a young start-up company, Ask an Expert

Accounting

Problem:

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 $18 per share dividend in 10 years and will increase the dividend by 6 percent per year thereafter.

Required:

Question: If the required return on this stock is 13 percent, what is the current share price?

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166513

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