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Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the nex nine years because the firm needs
Metallica Bearings, Inc. is a young start-up company. No dividends will be paid on the stock over the nex nine years because the firm needs to plow back its earnings to fuel growth. The company will pay dividend of $15 per share 10 years from today and will increase the dividend by 6 percent per yea thereafter. If the required return on this stock is 12 percent, what is the current share price? (Do not roun Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price References Worksheet Learning Objective: 08-01 Explain how stock prices depend on future dividends and dividend growth. Difficulty: 2 Intermediate Section: 8.1 Common Stock Valuation
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