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Stock price for universal business machines

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Reference no: EM131586121

On a certain date the following represents the stock price for Universal Business Machines (UBM).

52 Week High $54.05, 52 Week Low $41.73, Dividends paid $0.80, yesterday's closing price $47.25

According to the Value Line Investment, the growth rate in dividends for UBM Corporation is expected to be 15%/year for the next 6 years. Assume that UBM meets this anticipated abnormal dividend growth rate as expected, and then the growth rate falls to 4% per year forever. Assume investors require 17% return on the stock.

  • Is the stock priced correctly? 
  • What other factors could affect your answer?

Reference no: EM131586121

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