Problem:
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 earning to fuel growth. The company will pay a $10 per share dividend in 10 years and will increase the dividend by 6 percent per year thereafter.
Required:
Question: If the required return on this stock is 11 percent, what is the current share price?
Note: Show supporting computations in good form.