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

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Problem:

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next ten years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $14.75 per share 11 years from today and will increase the dividend by 5.25 percent per year thereafter.

Required:

Question: If the required return on this stock is 13.25 percent, what is the current share price?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167220

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