Financial Economics 466W Homework 9 More Dividends The following table provides information on two technology companies, IBM and Cisco. Use the data to answer the following questions. 1. What is the dividend growth rate of IBM? Use the "next 12 months" relative to the "trailing 12 months." Write your answer in percentage points with two decimal places (x.xx\%). 2. What is the forward dividend yield of IBM? Do not round your answer. Write your answer in percentage points with two decimal places (x.xx\%). 3. What is the cost of capital (r* or r-star) for IBM implied by the Gordon dividend discount model and your answers to the first two questions? Write your answer in percentage points with two decimal places (x.xx\%). 4. According to the Gordon model, what will be the price of the stock a year from now after it pays the next dividend? 5. IBM suddenly announced they are holding the dividend fixed at $7 per share indefinitely because of a financial crisis and recession. What should be the price of IBM stock according to the Gordon model and the cost of capital calculated in question 3? Show your work for partial credit. 2