Common stock value long dash—Variable growth Newman manufacturing is considering a cash purchase of the stock...

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 $3.81 per share and paid cash dividends of $2.11 per share (D0equals=$ 2.11). Grips' earnings and dividends are expected to grow at 35% per year for the next 3 years, after which they are expected to grow 88%per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 15% on investments with risk characteristics similar to those of Grips?

The maximum price per share that Newman should pay for Grips is ___

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jeff jeffy answered 1 year ago

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