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# Question

Common stock value-Variable Growth-Newman Manufacturing is Considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $3.86per share and paid cash dividends of$2.16 per share (Do = \$2.16) Grips earnings and dividends are expected to grow at 40% per year for the next 3 yrs. after whichthey are expected to grow 9% per year till infinity. What is the maximum price per share that Newman should pay for Grips if it had a required return of 12% oninvestments with risk characteristics similar to those of Grips. Round answer to the nearest cent.

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