Dividend growth model (DGM or Gordon Growth Model) questions:
a) What should the stock price of IBM be today if the relevant data are as follows:
Dividend just declared (quarterly): $1.40
Growth rate: 0.15 percent
Required return (current dividend yield): 3.27 percent dividend yield
b) What is IBM’s required return (required dividend yield) if the current price is $174.42, the dividend is the same ($1.40 per quarter), and the growth rate is 0.15 percent (also the same)?