How much are you willing to pay for the stock today if

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You forecast that IBM will pay dividends of $4 one year from today, $4.50 the next and $5.00 at the end of the third year. You expect earnings per share to be $8 at the end of the third year and based on the industry average as well as your own forecasts relative to the firm, you are willing to pay 12 times earnings at the point (i.e. the P/E ratio in year 3 is 12x). How much are you willing to pay for the stock today if you require a 14% return on investment

Reference no: EM132000343

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