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Von Bora Corporation is expected pay a dividend of $1.40 per share at the end of this year and a $1.50 per share at the
Von Bora Corporation is expected pay a dividend of $1.40 per share at the end of this year and a $1.50 per share at the end of the second year. You expect Von Bora's stock price to be $25.00 at the end of two years. Von Bora's equity cost of capital is 10% 1) The price you would be willing to pay today for a share of Von Bora stock, if you plan to hold the stock for two years is closest to: A) $23 .15 B) $20.55 C) $21.95 D) $21.90 2) Suppose you plan to hold Von Bora stock for only one year. Your dividend yield from holding Von Bora stock for the rst year is closest to: A) 6.0% B) 4.0% C) 6.5% D) 5.5% 3) Suppose you plan on purchasing Von Bora stock in one year, right aer the $1.40 dividend is paid. You then plan on selling your stock at the end of year two, right after the $1.50 dividend is paid. The total return that you will receive on your investment is closest to: A) 9.50% B) 10.75% C) 10.25% D) 10.00%
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