Firm needs to plow back its earnings to fuel growth

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Reference no: EM13970800

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 $13 per share dividend in 9 years and will increase the dividend by 5 percent per year thereafter.

If the required return on this stock is 10 percent, the current share price is $ ___

Reference no: EM13970800

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