IBM (as of early 2013) pays a dividend of ($3.30) per year. A current price is ($194.98.)
Question:
IBM (as of early 2013) pays a dividend of \($3.30\) per year. A current price is \($194.98.\) An analyst makes the following estimates:
• the current required return on equity for IBM is 9 percent, and
• dividends will grow at 14 percent for the next two years, 12 percent for the following five years, and 6.75 percent thereafter.
Based only on the information given, estimate the value of IBM using a three-stage DDM approach.
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Exhibit 7 gives the calculations Given these assumptions the three...View the full answer
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