Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 9 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $11 per share 10 years from today and will increase the dividend by 4 percent per year thereafter.

If the required return on this stock is 10 percent, what is the current share price?

Multiple Choice

• $77.75

• $73.86

• $81.64

• $70.68

• $80.08