Question
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.00 per share 8 years from today and will increase the dividend by 6 percent per year thereafter. The required return on the stock is 14 percent. What is the price of the stock 7 years from today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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