IBM Co. is a company in USA. An analyst estimated the normalized FCFE for IBM Co. to be 750 $ (per share) for the year just ended. The real country return for USA is 4.5%. to estimate the required return for IBM, the analyst makes the following adjustments to the real country return: an industry adjustment of +0.80%, a size adjustment of -0.30%, and a leverage adjustment of +0.55%. the long-term real growth rate for USA is estimated to be 2.5%, and the analyst expects the real growth rate of IBM to track the country rate. Using the single-stage FCFE valuation model, with real values for the discount rate and FCFE growth rate; the estimated value per share is closest to: a. 10,721.34$/share b. 15,843.54$/share c. 20,865.45$/share d. 25,204.92$/share e. None of the proposed answers are correct

IBM Co. is a company in USA. An analyst estimated the normalized FCFE for IBM Co. to be 750 $ (per share) for the year just ended. The real country return for USA is 4.5%. to estimate the required return for IBM, the analyst makes the following adjustments to the real country return: an industry adjustment of +0.80%, a size adjustment of -0.30%, and a leverage adjustment of +0.55%. the long-term real growth rate for USA is estimated to be 2.5%, and the analyst expects the real growth rate of IBM to track the country rate. Using the single-stage FCFE valuation model, with real values for the discount rate and FCFE growth rate; the estimated value per share is closest to: a. 10,721.34$/share b. 15,843.54$/share c. 20,865.45$/share d. 25,204.92$/share e. None of the proposed answers are correct

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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