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Problem 8-15 Nonconstant Growth (LO1) Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next nine
Problem 8-15 Nonconstant Growth (LO1) Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 8 percent per year thereafter. If the required return on this stock is 14 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price Problem 8-12 Stock Valuation and PE (LO2) The Dahlia Flower Company has earnings of $1.80 per share. The benchmark PE for the company is 16. a. What stock price would you consider appropriate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if the benchmark PE were 19? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price at a PE of 16 b. Stock price at a PE of 19
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