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Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 10 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 10 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $6 per share dividend in 11 years and will increase the dividend by 8 percent per year thereafter.
Required: If the required return on this stock is 12 percent, what is the current share price?
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