Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips e
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Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips e
Newman Manufacturing is considering a cash purchase of the stockof Grips Tool. During the year just completed, Grips earned$3.36 per share and paid cash dividendsof $1.66 pershare (D0=$1.66). Grips'earnings and dividends are expected to grow at25% per year for the next 3 years,after which they are expected togrow 6% per year to infinity. What isthe maximum price per share that Newman should pay for Grips if ithas a required return of 12% oninvestments with risk characteristics similar to thoseof Grips?