iPRODUCT DEACTIVATED To keep using Excel without interruption, please reactivate now. Reactivate G17 X fx B C D 8 9 Dividend in 1 year $ 2.80 10 Dividend in 2 years $ 3.00 11 Share price in 2 years $ 52 12 Equity cost of capital 10% 13 E F G 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? 14 15 16 Holding period (years) 17 18 Price per share 19 2 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? 20 21 22 Holding period (years) 23 24 Price per share 25 7-10 Select destination and press ENTER or choose Paste Type here to search 1 O R e L S x W File Home Insert Draw Page Layout Formulas Data Review View Help Acrobat X Cut Times New Roman 14 A A = = ab ab Wrap Text General Paste Copy V BIU Format Painter A Merge & Center v $ % % 9 10 .00 Clipboard Font Alignment PRODUCT DEACTIVATED To keep using Excel without interruption, please reactivate now. Number Reactivate G17 X fx B C 16 Holding period (years) 17 18 Price per share 19 D E F 2 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? 20 21 22 Holding period (years) 23 24 Price per share 25 1 c. Given your answer to (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 price compare to your answer in (a)? 26 27 28 Price per share 29 The price you would pay 30 31 32 irements 7-10 Select destination and press ENTER or choose Paste Type here to search affected by the amount of time you hold the stock. R L S W Copy of Amine_Berk_DeMarzo_Harford Problem_7-10_Start Sea General v $ % 9 00 File Home Insert Draw Page Layout Formulas Data Review View Help Acrobat X Cut Times New Roman V 14 v A A ab Paste Copy ab Wrap Text V BIU Format Painter Merge & Center v Clipboard G17 Font PRODUCT DEACTIVATED To keep using Excel without interruption, please reactivate now. X fx ly Alignment Reactivate B C 27 28 Price per share 29 The price you would pay 30 31 D E F Number affected by the amount of time you hold the stock. 32 irements 1 33 34 2 3 35 4 36 37 38 39 40 41 the stock if you plan to hold it for two years (1 pt.). In cell D18, by using cell references, calculate the price that you would be willing to pay for stock in one year (1 pt.). In cell D24, by using cell references, calculate the price at which you would be able to sell the In cell D28, by using cell references, calculate the price that you would be willing to pay for the stock if you plan to hold it for one year (1 pt.). Note: Use cell D22 as the discount period. (1 pt.). In cell D29, type whether the price you would pay is or is not affected by the holding period 7-10 Select destination and press ENTER or choose Paste Type here to search 0 R e L S W