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melamori03 [73]
3 years ago
8

The recent dividend payout by IBM was $3.00. IBM's dividends are expected to grow about 6.5% per year. If your required rate of

return is 17%. What is the expected stock price two years from now. Round the answer to the nearest integer
Business
1 answer:
9966 [12]3 years ago
3 0

Answer:

Answer for question :

The recent dividend payout by IBM was $3.00. IBM's dividends are expected to grow about 6.5% per year. If your required rate of return is 17%. What is the expected stock price two years from now. Round the answer to the nearest integer " is as explained below.

Explanation:

1. the expected stock price two years from now = 3 * 1.065^3/(0.17 - 0.065)  

the expected stock price two years from now = 34.51

2. FV = 0, N = 8, PMT = 288, rate = 4%

use PV funciton in Excel    

value at time 0 = 1939.03

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