Calculate the stock price per share for IMB based on the 2017 10K report.

You may use the dividend discount model:

Link to IMB 10K report: https://www.ibm.com/investor/att/pdf/IBM_2017_Annual_10K.pdf

Dividend Model Notes:

The basis of equity valuation is the idea that the value of an equity security is determined by the payments that the investor can expect to receive. These payments are:

Dividends received during the holding period.

Capital gains when the security is sold, that is the expected price of the security at the end of the forecasted holding period. (Note, the future stock price is assumed to be related to the expected dividends that the new investor expects to receive). Therefore, expected dividends is the sole driver of stock price under this type of valuation model.

To summarize, this model equates the value of company equity with the present value of all future expected dividends.

Dividend discount model with constant perpetuity

Assumes that the forecasted dividends stabilize at some point in the future and remain constant thereafter (i.e, perpetuity).

The present value for a perpetuity of constant (non-changing) dividends:

Dividend amount/cost of equity capital

Dividend discount model with increasing perpetuity

Gordon growth model assumes the forecasted dividends stabilize at some point in the future and continue to grow at some constant rate thereafter.

Dividend amount when constant growth begins/(cost of equity capital constant growth rate)

Issues in Applying the Dividend Discount Model:

Cant use if company is not paying dividends or if you have no information to forecast dividends with.