Firm needs to plow back its earnings to fuel growth

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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 pay a $7 per share dividend in 12 years and will increase the dividend by 7 percent per year thereafter.

Required: If the required return on this stock is 15 percent, what is the current share price?

Reference no: EM131943044

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