What is the highest price are willing to pay for a share

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AbbVie (NYSE: ABBV) stock has been trading around $100 per share. Furthermore, you obtained the following information:

Current annual dividend payment - $5.20 per share
Projected dividend growth - 7%
Your desired annual return on investment - 10%

Problem a) What is the highest price you are willing to pay for a share of IBM's common stock? What does the (Constant) Dividend discount model tell you? Discuss.

Problem b) Briefly discuss the Miller and Modigliani's proposition on dividend irrelevance

Reference no: EM132899852

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