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You believe that there is a 30% probability that the dividend paid by IBM next year is going to be $9.00, and a 70% probability
You believe that there is a 30% probability that the dividend paid by IBM next year is going to be $9.00, and a 70% probability that the dividend will increase to $10.00. You also feel that IBM will grow at the rate of 8% for the long term. Your required rate of return for IBM stock is 12%. How much should you pay for a share of IBM?
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