Common stock valuelong dash

Variable growthNewman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year justcompleted, Grips earned $3.17

3.17 per share and paid cash dividends of $1.47

1.47 per share (D0equals

=$ 1.47

$1.47). Grips' earnings and dividends are expected to grow at 40

40% per year for the next 3years, after which they are expected to grow 5

5% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 14

14% on investments with risk characteristics similar to those ofGrips?