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Value of the company to the stockholders

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Suppose that the controlling stock of IBM Corporation was placed in a perpetual trust with an irrevocable clause that cash or liquidating dividends would never be paid out of this trust. Earnings per share continued to grow. What would be the value of the company to the stockholders? Why?

Why is the growth rate in earnings and dividends of a company likely to taper off in the future? Could the growth rate increase as well? If it did, what would be the effect on stock price?

Reference no: EM132395224

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