Part A. Suppose Acap Corporation will pay a dividend of $2.84 per share at the end of this year and $3.05 per share next year. You expect Acap's stock price to be $53.48 in two years. Assume that Acap's equity cost of capital is 9.7%.

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? (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?

c. Given your answer in (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 (a)?

Part B. Assume Gillette Corporation will pay an annual dividend of $0.65 one year from now. Analysts expect this dividend to grow at 12.0% per year thereafter until the 5th year. Thereafter, growth will level off at 2.0%per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.0%? The value of Gillete's stock is $____. (Round to the nearest cent)