Business, 17.03.2020 02:11 alexandriabritt1683

You've collected the following information from your favorite financial website. 52-Week Price Hi 64.60 Lo 4780 Div Yld % 1.9 Net Chg -05 18 145.94 171.13 91.80 62 Stock (Div) Abbott 1.12 Ralph Lauren 2.50 IBM 6.30 Duke Energy 3.56 Disney 1.68 70.28 139.13 71.96 96.20 PE Ratio 235.6 70.9 238 176 15.5 Close Price 62.91 139.71 145.39 74.30 4.3 4.9 84 113.19 17 10 According to your research, the growth rate in dividends for IBM for the next 5 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. a. According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued? LE 1 a. Current stock price b. Valuation 1

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