1. Assume IBM is expected to pay a total cash dividend of $3.60 next year and dividends are expected to grow indefinitely by 3 percent a year. Assume the required rate of return (i.e. equity holder's opportunity cost of capital) is 9 percent. Assuming this is the best information available regarding the future of this 1" firm, what would be the most economically rational value of the stock today (i.e. today s price")? a. 0.60 b. 120.00 c. 60.00 d. 92.70 e. 40.00 Answer c constant growth perpetuity valuation model = Dl/(r-g) =3.6/(.09-.03)= 60.00