What is maximum price per share-newman should pay for grips

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Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just? completed, Grips earned ?$3.03 per share and paid cash dividends of ?$1.33 per share ?(D0equals $ 1.33?). ? Grips' earnings and dividends are expected to grow at 25 ?% per year for the next 3? years, after which they are expected to grow 6 ?% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 11 ?% on investments with risk characteristics similar to those of? Grips?  

Reference no: EM131352865

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