Question 5: Stock Valuationa) 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. Grips’ earnings and dividends are expected to grow at 25% per year for the next 4 years, after which they are expected to grow at 10% per year for the next 2 years, and afterward grow at 5% to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 15% on investments with risk characteristics similar to those of Grips? ​​​​​​​b) Home 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 $3.40. It expects zero growth in the next year. In years 2 and 3, 5% growth is expected, and in year 4, 15% growth. In year 5 and thereafter, growth should be a constant 10% per year. What is the maximum price per share that an investor who requires a return of 14% should pay for Home Place Hotels common stock?c) Trinid Co. pulled off a miraculous recovery. Four years ago, it was near bankruptcy. Today, it announced a GH₵ 1 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by GH₵ 1 a year for another 2 years. After the third year, dividend growth is expected to settle down to a more moderate long-term growth rate of 6%. If the firm’s investors expect to earn a return of 14% on this stock, what must be its price?