Metallica Bearings, Incorporated, 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 pay a dividend of $12 per share 8 years from today and will increase the dividend by 7 percent per year thereafter.

If the required return on this stock is 13 percent, what is the current share price?

Multiple Choice

$87.56

$89.26

$80.76

$75.23

$85.01