Apocalyptica Corp. pays a constant $18 dividend on its stock. The company will maintain this dividend for the next 9 years and will then cease paying dividends forever.
Required:
If the required return on this stock is 11 percent, what is the current share price?
$104.65
$97.67
$99.67
$162.00
$110.63
2. 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 $9 per share dividend in 13 years and will increase the dividend by 6 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.)
$30.55
$31.15
$26.25
$28.18
$29.66