According to the 2018 Value Line Investment Survey, the growth rate in dividends for IBM for the

Question:

According to the 2018 Value Line Investment Survey, the growth rate in dividends for IBM for the next five years is expected to be 5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 3.5 percent indefinitely. Assume investors require a return of 10 percent on IBM stock. Is the stock priced correctly? What factors could affect your answer?

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Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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