Question: can you please explain a step by step solution. I am struggling P7-14 Common stock value: Variable growth Newman Manufacturing is considering a cash purchase

can you please explain a step by step solution. I am struggling

P7-14 Common stock value: Variable growth Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $4.25 per share and paid cash dividends of $2.55 per share (Do = 2.55). Grips' earnings and dividends are expected to grow at 25% per year for the next three years, after which they are expected to grow at 10% per year forever. What is the maximum price per share that Newman should pay for Grips if it has a re- quired return of 15% on investments with risk characteristics similar to those of Grips

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