8. Create a valuation summary of International Business Machines Corporation (IBM) using the following information and then filling in the next chart with the specified valuations and ratios. Show your calculations.

Figures for IBM Computed Value Five-year expected growth 4.06% Required return 9.76% Beta 1.29 Current dividend $6.21 5-year average dividend $5.39 Current share price $137.69 Projected annual earnings per share, this year $13.92 Projected annual earnings per share, next year $14.11 Total revenues $80.37 billion Shares outstanding 916.00 million Book value per share $18.48 Price Ratios for IBM 1st Year 2nd Year 3rd Year 4th Year 5 th Year (current year) P/E 10.40 9.47 13.56 12.83 18.16 P/CF 9.54 7.65 8.61 9.75 6.22 P/S 1.49 1.45 1.81 1.72 1.30 EPS 11.90 13.42 12.38 6.14 9.52 CFPS 1.08 2.25 1.29 1.36 1.31 SPS 85 85.7 86.5 87.1 87.74 a. Valuation Method Computed Value Dividend Discount Model Residual Income Model Free Cash Flow Model Price Ratio Analysis: Earnings Cash Flow Sales Five-year average price ratio Current value per share Growth rate 4.06% 8% 6% Expected share price

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