Problem:
Kimar, Inc. was in an excellent position to take advantage of liberalized casino gambling laws in Arizona and, as a result, is experiencing an annual growth rate of 35%. After 4 years this growth rate is expected to decline to 12% per year as other competitors enter the industry. Stockholders require an 18% return on stocks with the risk features of Kimar. If Kimar currently pays a dividend of $1.50 per share, what is the most that a potential investor should pay Kimar's stock and still earn an 18% return.