Question 8 content area top

Part 1

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

$1.70.

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

11%

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 content area bottom

Part 1

The maximum price per share that an investor who requires a return of

16%

should pay for Home Place Hotels common stock is

$enter your response here.

(Round to the nearest cent.)