Question

Metallica Bearings, Inc., is a young start-up company. Nodividends will be paid on the stock over the next 7 years becausethe firm needs to plow back its earnings to fuel growth. Thecompany will pay a $13 per share dividend in 8 years and willincrease the dividend by 6 percent per year thereafter.

Required:

If the required return on this stock is 12 percent, what is thecurrent share price? (Do not round your intermediatecalculations.)

$102.91

$100.95

$93.11

$87.51

$98.01