Common stock value-variable growth

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Reference no: EM131599815

Common stock value-Variable growth Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $2.92 per share and paid cash dividends of $1.22 per share (D_ = $1.22). earnings and dividends are expected to grow at 40% per year for the next 3 years, after which they are expected to grow 9% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 10% on investments with risk characteristics similar to these of Grips? The maximum price share that Newman should pay for Grips is $ (Round to the nearest cent.)

Reference no: EM131599815

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