52 Week Price

Hi Lo Stock (Div) Div Yld% PE Ratio Close Price Net Chg

64.60 47.80 Abbot 1.12 1.9 235.6 62.91 -.05

145.94 70.28 Ralph Lauren 2.50 1.8 70.9 139.71 -.62

171.13 139.13 IBM 6.30 4.3 23.8 145.39 .19

91.80 71.96 Duke Energy 3.56 4.9 17.6 74.30 .84

113.19. 96.20. Disney 1.68 1.7 15.5 ?? .10

According to the 2018 Value Line Investment Survey, the growth rate in dividends for IBM for the next five years is expected to be 5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 3.5 percent indefinitely. Assume investors require a return of 10 percent on IBM stock. Is the stock priced correctly? What factors could affect your answer?