Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because t

Question

3 years ago

11

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because t

he firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
If the required return on this stock is 15 percent, what is the current share price?

Business