Common stockvalueVariablegrowthPersonal Finance ProblemHome Place Hotels, Inc., is entering into a 3-year remodeling and expansion...
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Common stockvalueVariablegrowthPersonal 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
$4.40. It expects zero growth in the next year. In years 2 and 3, 3%growth is expected, and in year 4, 18% 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 16% should pay for Home Place Hotels common stock?
QUESTION: The maximum price per share that an investor who requires a return of 16% should pay for Home Place Hotels common stock is ??
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