=+LG 4 P7–13 Common stock value: Variable growth Moors Tools is considering a cash purchase of the stock of Crooks Moldings. During the year just completed, Crooks earned

£4.50 per share and paid cash dividends of £2.30 per share (D0 = 2.30). Crook’s earnings and dividends are expected to grow at 20% per year for the next 2 years, after which they are expected to grow at 5% per year forever. What is the maximum price per share that Moors should pay for Crooks if it has a required return of 12%

on investments with risk characteristics similar to those of Crooks?

Personal Finance Problem