Common stock

valuelong dashVariable

growthPersonal Finance ProblemHome Place Hotels, Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that time, but when it iscomplete, it should allow the company to enjoy much improved growth in earnings and dividends. Last year, the company paid a dividend of

$2.102.10.

It expects zero growth in the next year. In years 2 and 3,

44%

growth is expected, and in year 4,

2121%

growth. In year 5 and thereafter, growth should be a constant

12%

per year. What is the maximum price per share that an investor who requires a return of

15%

should pay for Home Place Hotels common stock?