What price would you be willing to pay for a share

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Suppose Acap Corporation will pay a dividend of $2.74 per share at the end of this? year, and $2.94 per share next year. You expect? Acap's stock price to be $52.81 in two years. If? Acap's equity cost of capital is 9.2%?:

a. What price would you be willing to pay for a share of Acap stock? today, if you planned to hold the stock for two? years?

b. Suppose instead you plan to hold the stock for one year. What price would you expect to be able to sell a share of Acap stock for in one? year?

c. Given your answer in part ?(b?), what price would you be willing to pay for a share of Acap stock? today, if you planned to hold the stock for one? year?

How does this compare to your answer in part ?(a?)?

It is best not to round intermediate calculations? - make sure to carry at least four decimal places in intermediate calculations

Reference no: EM132813719

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