Suppose Acap Corporation will pay a dividend of $2.77 per share at the end of this year and $2.98 per share next year. You expectAcap's stock price to be $50.66 in two years. Assume thatAcap's equity cost of capital is 10.8%.

a. What price would you be willing to pay for a share of Acap stocktoday, if you planned to hold the stock for twoyears?

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 oneyear?

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 oneyear? How does this compare to your answer in (a)?