Current Share Price Assignment
February 18th, 2020
| 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 pay a dividend of $10 per share 11 years from today and will increase the dividend by 7 percent per year thereafter. |
| If the required return on this stock is 14 percent, what is the current share price? |
| Lohn Corporation is expected to pay the following dividends over the next four years: $10, $7, $6, and $2. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. |
| If the required return on the stock is 12 percent, what is the current share price? |
| Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 23 percent for the next 3 years, with the growth rate falling off to a constant 6 percent thereafter. |
| If the required return is 11 percent and the company just paid a $1.30 dividend. what is the current share price? |
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