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metallica bearings, incorporated, 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 earnings to fuel growth. the company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 6 percent per year thereafter. if the required return on this stock is 12 percent, what is the current share price? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)



Answer :

The current share price is $78.18

Dividend after increase the dividend by 6 percent per year

=$10/(.11 − .06)

=$200

current share price  =200.00/1.11^9

=$78.18

Share price refers to the value of a organization's stock. the entire fee of a publicly-traded corporation is known as its marketplace capitalization ("market cap"), that's arrived at through including up the fee of all of the stock extremely good.

A share price is the fee of a single percentage of a number of saleable fairness shares of a company. In layman's terms, the stock fee is the very best amount someone is inclined to pay for the inventory, or the lowest quantity that it can be bought for.

A share price – or a stock rate – is the quantity it would fee to buy one proportion in a enterprise. The charge of a share isn't always constant, but fluctuates in step with market situations. it will in all likelihood increase if the organization is seemed to be doing properly, or fall if the business enterprise is not meeting expectations.

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