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 ?$3.74 per share and paid cash dividends of ?$ 2.04 per share ?(D0 equals = $2.04?). ? Grips' earnings and dividends are expected to grow at 35?% per year for the next 3? years, after which they are expected to grow 9?% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 12?% on investments with risk characteristics similar to those of? Grips?
The maximum price per share that Newman should pay for Grips is $.(Round to the nearest? cent.)