Maximum price per share that newman should pay for grips

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Reference no: EM13731918

Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $3.84 per share and paid cash dividends of $2.14 per share (D0= $2.14). Grips' earnings and dividends are expected to grow at 40% 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 11% on investments with risk characteristics similar to those of Grips?

What is the maximum price per share that Newman should pay for Grips?

$_____ (round to the nearest cent)

Reference no: EM13731918

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