IBM has generated annual dividend growth of 15.1% over the past 3 years. IBM's most recent annual dividend is $2.90. Assume IBM will continue to increase dividends at 15.1 % for the next 5 years before reducing its dividend growth to 6% for the long term. Also assume that the required return for IBM stock is 9.5%. It is currently trading for $179.90.

Using two stage dividend discount model to determine the current intrinsic value for IBM given these assumptions.

1- is the stock overvalued or undervalued? Explain

2- how long dividend growth rate will provide an intrinsic value similar to the current market price?

3- what required rate of return would provide an intrinsic value similar to the current market price?