Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 15 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $11 per share 16 years from today and will increase the dividend by 8 percent per year thereafter.

If the required return on this stock is 16 percent, what is the current share price?

Multiple Choice

• $15.29

• $15.58

• $12.79

• $14.10

• $14.84