Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...

Question

Question

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

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Using DDM,15

Price at year 8 = D9/(required return - g)= 15.25/(0.1375 - 0.0575)

= 15.25/0.08 = 190.625

Current Price = 190.625 / (1+ 0.1375)^8 = 68.01 Answer

Please let me know in case you have any queries and I will be happy to assist you.

Add a comment

Answer 2

Similar Homework Help Questions

Metallica bearings inc is a young start up company no dividends will be paid on the...

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?...
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 then pay a dividend of $13.25 per share 10 years from today and will increase the dividend by 5.00 percent per year thereafter. Required: If the required return on this stock is 13.00 percent, what is the current share price? (Do not round intermediate...
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 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $16.25 per share 12 years from today and will increase the dividend by 5.5 percent per year thereafter. If the required return on this stock is 13.5 percent, what is the current share price? (Do not round intermediate calculations...

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 $14 per share dividend 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price? (Do not round intermediate calculations and round...
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 $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 14 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...

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 $20 per share exactly 10 years from today and will Increase the dividend by 4 percent per year thereafter. If the required return on this stock is 10 percent, what is the current share price? (Do not round Intermediate calculations...

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 $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...

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 6 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...
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 $17 per share 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 12.5 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...

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 9 years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.25 per share 10 years from today and will increase the dividend by 5 percent per year thereafter. The required return on the stock is 13 percent. What is the price of the stock 9 years from today? (Do...

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...

Homework Answers