Firm needs to plow back earnings to fuel growth

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Reference no: EM132009202

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 $16 per share in 10 years and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 10 percent, what is the current share price?

Reference no: EM132009202

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