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 $15.75 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 13 percent, what is the current share price? (do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

The current stock price is $65.54

Step-by-step explanation:

Consider the provided information.

The company will then pay a dividend of $15.75 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 13 percent,

Therefore, the value of next dividend is $15.75, and it will increase with the rate of 5% i.e growth rate = 5% = 0.05

The required rate is 13% = 0.13

Now calculate the stock price for the next 9 yr as shown:

Now calculate the current stock price as shown:

Therefore, the current stock price is $65.54

step-by-step explanation:

yes it represnts a functio, their are not 2 of the same numbers on the both sides