Solution-Real return and we expect inflation

Real return and we expect inflation

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1) IBM will pay its first dividend of 1.00, two years from today. The dividends will grow at a rate of 5% per annum until the 7th year. After that, the dividends will grow at a rate of 3% until the end of the 15th year.After that the dividends will grow at a rate of 2% forever. Of return of IBM stock is 10% per annual what should be the Pv of the stock?

2) If we require a 5% real return and we expect inflation to be 4%, what is the nominal rate?

Reference no: EM132270535

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Real return and we expect inflation

Reference no: EM132270535

Reference no: EM132270535

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