Question

AI Inc., an artificial intelligence company is a young start-up company. No dividends will be paid...

AI Inc., an artificial intelligence company is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to reinvest its earnings to sustain its growth. The company will pay a dividend of $19 per share, 10 years from today and will increase the dividend by 4% per year thereafter. If the required return on this stock is 13%, what is the current share price?

please use excel

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

This question requires application of 2 concepts, constant growth dividend discount model and basic time value of money.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
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 earnings to fuel growth. The company will pay a $9.4 per share dividend 10 years from today and will increase the dividend by 4.9 percent per year thereafter. If the required return on this stock is 8.96 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
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 earnings to fuel growth. The company will pay a $10 per share annual dividend 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required annual return on this stock is 11 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 13 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $13 per share 14 years from today and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
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 earnings to fuel growth. The company will pay a dividend of $17 per share 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price? (Do not round intermediate calculations and...
Metallic Bearings, Inc, is a young start-up company. No dividends will be paid on the stock...
Metallic 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 pay a dividend of $9 per share 10 years from today and will increase the dividend by 8 percent per year thereafter. If the required return on this stock is $15 per share, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
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 earnings to fuel growth. The company will pay a $7.74 per share dividend 10 years from today and will increase the dividend by 1.36 percent per year thereafter. If the required return on this stock is 8.28 percent, what is the current share price? Omit the $ dollar sign and commas....
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 12 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $11 per share dividend in 13 years and will increase the dividend by 7 percent per year thereafter.    Required: If the required return on this stock is 13 percent, what is the current share price? (Do not round your intermediate calculations.)
Far Side Corporation is a young start-up company. No dividends will be paid on the stock...
Far Side Corporation 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 $17 per share 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
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 pay a $13 per share dividend in 10 years and will increase the dividend by 3 percent per year thereafter.    Required: If the required return on this stock is 6 percent, what is the current share price? (Do not round your intermediate calculations.)
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock...
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 14 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $8 per share dividend in 15 years and will increase the dividend by 7 percent per year thereafter. If the required return on this stock is 11 percent, what is the current share price?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT