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Anle Corporation has a current stock price of $23.41 and is expected to pay a dividend of $1.20 in one year. Its expected stock price
Anle Corporation has a current stock price of $23.41 and is expected to pay a dividend of $1.20 in one year. Its expected stock price right after paying that dividend is $25.63. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is %. (Round to two decimal places.) b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? The dividend yield is %. (Round to two decimal places.) The capital gain is %. (Round to two decimal places.) one year to justify its current price? We can expect Evco stock to sell for $ (Round to the nearest cent.) The new price will be $ (Round to the nearest cent.) 10.9%. 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. For what price would you expect to be able to sell a share of Acap stock in one year? 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? If you plan to hold the stock for two years, the price you would pay for a share of Acap stock today is $ (Round to the nearest cent.) b. Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one year? The price for which you expect to sell a share of Acap stock in one year is $. (Round to the nearest cent.) Given your answer in (b), the price you would be willing to pay for a share of Acap stock today, if you planned to hold the stock for one year is $ (Round to the nearest cent.) When you compare your answer in (a) to the answer in (c), (Select the best choice below.) A. The price in part (a) is higher than the price in part (c). B. The price in part (a) is the same as the price in part (c). C. The price in part (a) is lower than the price in part (c). D. They are not comparable values
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