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This question has three parts.) Von Bora Corporation is expected pay a dividend of $2.06 per share at the end of this year and a
This question has three parts.)
Von Bora Corporation is expected pay a dividend of $2.06 per share at the end of this year and a $2.37 per share at the end of the second year. Immediately after Von Bora pays the $2.37 per share dividend at the end of the second year, you expect Von Bora's stock price to be $22.00 per share. Von Bora's cost of equity capital is 9.0%.
Question A:
What is the highest price that you would be willing to pay today for a share of Von Bora stock if you plan to hold the stock for two years?
$ nothing per share (round to two decimal places)
Question B:
What is the highest price that you would be willing to pay today for a share of Von Bora stock if you plan to hold the stock for five years?
$ nothing per share (round to two decimal places)
Question C:
At the end of the second year (e.g., at time t=2), immediately before Von Bora pays the $2.37 per share dividend, at what price would you expect shares of Von Boras stock to be selling?
$ nothing per share (round to two decimal places)
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