Metallica Bearings, Inc., is a young start-up company.
No dividends will be paid on the stock over the next four years,
because the firm needs to plow back its earnings to fuel growth.
The company will then pay a dividend of $12 per share 5 years from
today and will increase the dividend by 5 percent per year
thereafter.
Required:
If the required return on this stock is 12 percent, what is
the current share price?
Value after year 5=(D5*Growth Rate)/(Required rate-Growth Rate)
=(12*1.05)/(0.12-0.05)
=180
Hence current share price=Future dividend and value*Present value of discounting factor(rate%,time period)
=12/1.12^5+180/1.12^5
=$108.95(Approx).
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
Metallica Bearings, Inc., 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 $12 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 12 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 8 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $12 per share 9 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 13 percent, what is the current share price?
Metallica Bearings, Inc., 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 $14 per share dividend 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?
Metallica Bearings, Inc., 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 $7.35 per share dividend 10 years from today and will increase the dividend by 3.12 percent per year thereafter. If the required return on this stock is 7.19 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 14 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $13 per share 15 years from today and will increase the dividend by 8 percent per year thereafter. If the required return on this stock is 13 percent, what is the current share price?
Metallica Bearings, Inc., 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 $15 per share in 10 years 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?
Metallica Bearings, Inc., 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 6 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 14 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $6 per share 15 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 $17.16 $18.61 $18.97...
Metallica Bearings, Inc., 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 $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 14.5 percent, what is the current share price? (Do not round intermediate calculations and...
Metallica bearings inc is a young start up company no dividends will be paid on the stock over the next 8 years because the firm needs to plow back its earnings to fuel growth. the company will then pay a dividend of 16.50 per share 9 years from today and will increase the dicidend by 5.75 percent per year thereafter. the required return on the stock is 13.75 percent. what is the price of the stock 8 years from today?...