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3.Dividend growth model (DGM or Gordon Growth Model ) questions: a) What should the stock price of IBM be today if the relevant data are

3.Dividend growth model (DGM or Gordon Growth Model) questions:

a) What should the stock price of IBM be today if the relevant data are as follows:

Dividend just declared (quarterly): $1.40

Growth rate: 0.15 percent

Required return (current dividend yield): 3.27 percent dividend yield

b) What is IBMs required return (required dividend yield) if the current price is $174.42, the dividend is the same ($1.40 per quarter), and the growth rate is 0.15 percent (also the same)?

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