Remodeling and expansion project

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Home Place? Hotels, Inc., is entering into a? 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that? time, but when it is? complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last? year, the company paid a dividend of ?$2.10.

It expects zero growth in the next year. In years 2 and? 3, 3% growth is? expected, and in year? 4, 19% growth. In year 5 and? thereafter, growth should be a constant 8% per year. What is the maximum price per share that an investor who requires a return of 16?% should pay for Home Place Hotels common? stock?

Reference no: EM131591274

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