IBM (as of early 2013) pays a dividend of ($3.30) per year. A current price is ($194.98.)

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IBM (as of early 2013) pays a dividend of $$3.30$ per year. A current price is $$194.98.$ An analyst makes the following estimates:

• the current required return on equity for IBM is 9 percent, and

• dividends will grow at 14 percent for the next two years, 12 percent for the following five years, and 6.75 percent thereafter.

Based only on the information given, estimate the value of IBM using a three-stage DDM approach.

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Equity Asset Valuation

ISBN: 9781119850519

3rd Edition

Authors: Jerald E Pinto, CFA Institute

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Question Posted: Mar 30, 2024 01:00 AM

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IBM (as of early 2013) pays a dividend of ($3.30) per year. A current price is ($194.98.)

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Exhibit 7 gives the calculations Given these assumptions the three...View the full answer

Equity Asset Valuation

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