The URI Corporation is starting a 3 year expansion project. This project will require a great deal of construction that will limit the corporations earnings during construction. After construction the company expects improved growth in earnings and dividends. The dividend that URI paid to its stockholders last year was $3.40. Because of construction, it expects zero growth next year, 5% growth in years 2 and 3, and 15% growth in year 4. In year 5 and thereafter a constant 10% growth rate is expected. What is the maximum price per share one should pay for the stock if they require a 14% return?

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+ Step # 1 Annual dividends 2 PV of annual dividends 3 PV of stock at end of initial growth 4 Sum of step 2 and 3