Question 1 CF1 - 10p Question

The company ICA Gruppen will pay a dividend of 15 SEK per share at the end of this year and 15.5 kr per share the next year. You expect that ICA Gruppen's stock price will be 520 SEK in two years. If their cost of equity is 8.5%

a. What price would you be willing to pay for one ICA Gruppen 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 ICA Gruppen for in one year?

c. Assume now that the price of Ica Gruppen in one year would be 500 SEK. Then what price would you be willing to pay for a share of ICA Gruppens stock today, if you planned to hold the stock for one year?