Question
Common stock valueVariable growthPersonal Finance ProblemHome Place Hotels, Inc., is entering into a 3-year remodeling and expansion project. The construction will have a limiting effect
Common stock valueVariable
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 is complete, it should allow the company to enjoy much-improved growth in earnings and dividends. Last year, the company paid a dividend of $3.70. It expects zero growth in the next year. In years 2 and 3, 5% growth is expected, and in year 4, 17% growth. In year 5 and thereafter, growth should be a constant 9% per year. What is the maximum price per share that an investor who requires a return of 17% should pay for Home Place Hotels common stock?
The maximum price per share that an investor who requires a return of 17% should pay for Home Place Hotels common stock is?
Please Show work ( I tried 3 times and kept getting wrong answer)
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