15. Nonconstant Growth Metallica Bearings, Inc., is a young startup 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 then pay a dividend of $14 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 11.5 percent, what is the current share price?
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- Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12% rate of return. Although the dividend has been growing at a rate of 30% per year in recent years, this growth rate is expected to last only for another 2 years (g0,1 = g1,2 = 30%). After Year 2, the growth rate will stabilize at gL = 7%. What is CCC’s stock worth today? What is the expected stock price at Year 1? What is the Year 1 expected (1) dividend yield, (2) capital gains yield, and (3) total return? What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return?Metallica Bearings, Inc., is a young start-upcompany. No dividends will be paid on the stock over the next nine years becausethe fi rm needs to plow back its earnings to fuel growth. The company will pay a$10 per share dividend in 10 years and will increase the dividend by 5 percent peryear thereafter. If the required return on this stock is 14 percent, what is the currentshare price?Metallica Bearings, Inc., is a youngstart-up company. No dividends will be paid on the stock over the next nine yearsbecause the firm needs to plow back its earnings to fuel growth. The company will pay a$17 per share dividend 10 years from today and will increase the dividend by 3.9 percentper year thereafter. If the required return on this stock is 12.5 percent, what is the currentshare price?
- 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 $14 per share dividend 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? Future dividend Years until first dividend Dividend growth rate Required return Þ $ Complete the following analysis. Do not hard code values in your calculations. Stock price in 9 years Stock price today Sheet1 ... 14.00 10 3.9% 12.5%Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 10 years because the firm needs to plow back its earnings to fuel. growth. The company will then pay a dividend of $13.50 per share 11 years from today and will increase the dividend by 5.25 percent per year thereafter. If the required return on this stock is 13.25 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 is complete but not entirely correct. Current share priceMetallica 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 $14 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 11.5 percent, what is the current share price?
- Simpkins Corporation does not pay any dividends because it is expandingrapidly and needs to retain all of its earnings. However, investors expectSimpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly—at a rate of 80%per year—during Years 4 and 5. After Year 5, the company should grow at aconstant rate of 7% per year. If the required return on the stock is 16%, whatis the value of the stock today (assume the market is in equilibrium with therequired return equal to the expected return)?Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 8 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $14.00 per share 9 years from today and will increase the dividend by 5.75 percent per year thereafter. If the required return on this stock is 13.75 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings, hence it does not pay dividends. However, investors expects Microtech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from Today. The dividend should grow rapidly-at a rate of 50 percent per year-during Years 4 and 5, but after Year 5 growth should be constant 8 percent per year. If the required return on Microtech is 15 percent, what is the value of the stock today?
- Cape Corp. will pay a dividend of $2.70 next year. The company has stated that it will maintain a constant growth rate of 4.75 percent a year forever. a. If you want a return of 16 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If you want a return of 11 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $2.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 60% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 9% per year. If the required return on the stock is 16%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Do not round intermediate calculations. Round your answer to the nearest cent.Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 46% per year - during Years 4 and 5; but after Year 5, growth should be a constant 8% per year. If the required return on Microtech is 17%, what is the value of the stock today? Round your answer to the nearest cent.
