NORDAM Corporation is expected pay a dividend of $2.00 per share at the end of this year and a $2.25 per share dividend at the end of the second year. Immediately after NORDAM pays the $2.25 per share dividend at the end of the second year, you expect NORDAM's stock price to be $22.00 per share. Von Bora's cost of equity capital is 10%.

a. What is the highest price that you would be willing to pay today for a share of NORDAM stock if you plan to hold the stock for two years?

b. What is the highest price that you would be willing to pay today for a share of NORDAM stock if you plan to hold the stock for five years?

c. At the end of the second year (e.g., at time t=2), immediately before NORDAM pays the $2.25 per share dividend, at what price would you expect shares of NORDAMs stock to be selling?