Ibm corp earned 1225 in eps last year ibm has recently


IBM corp. earned $12.25 in EPS last year. IBM has recently adopted a long term target to pay out 50% of all future earnings as dividends.

IBM's dividends and earnings are expected to grow at a constant rate of 3% in the future.

You require a 9% rate of return on stock investments of similar risk.

What is your estimate of the market value of IBM stock. Based on the information provided what is the implied return on new investment (ROE*) for IBM?

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Financial Management: Ibm corp earned 1225 in eps last year ibm has recently
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