Common stock value long dash-variable growth

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Common stock value long dash—Variable growth

Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just? completed, Grips earned ?$2.792.79 per share and paid cash dividends of ?$1.091.09 per share ?(D0equals=$ 1.09$1.09?). ? Grips' earnings and dividends are expected to grow at 4040?% per year for the next 3? years, after which they are expected to grow 55?% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 1111?% on investments with risk characteristics similar to those of? Grips?

Reference no: EM131552653

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