Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over

Question:

Metallica Bearings, Inc., is a young start-up 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 pay a dividend of $17 per share exactly 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 percent, what is the current share price?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...