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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 $2.94 per share and paid cash dividends of $1.24 per share (D_0 = $1.24). Grips' earnings and dividends are expected to grow at 30% 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 15% on investments with risk characteristics similar to those of Grips?

The maximum price per share that Newman should pay for Grips is S (Round to the nearest cent.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92073411

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