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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 $15.50 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? Price in 7 years = ?
What is the current share price? Current share price = ?
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