Common stock value long dash-variable growth

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Common stock valuelong dash—Variable growth. Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just? completed, Grips earned ?$4.24 per share and paid cash dividends of ?$2.54 per share ?(D0=$2.54?). ? Grips' earnings and dividends are expected to grow at 35?% per year for the next 3? years, after which they are expected to grow 8?% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 16?% on investments with risk characteristics similar to those of? Grips?

Reference no: EM131912412

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