Use the Information for the Question(s)below

question 78

Multiple Choice

Use the information for the question(s) below.
Von Bora Corporation is expected to 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%.
-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)$20.65.
• C)$21.95.
• D)$21.90.

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Definitions:

Moving Average

A statistical measure to smooth out short-term fluctuations and highlight longer-term trends or cycles in data.

Exponential Smoothing

A technique used in time series forecasting that applies decreasing weights to past data, giving more importance to more recent observations.

Stationary Time Series

A type of time series data where statistical properties such as mean and variance are constant over time.

Price/Pound

Price per pound is a unit of measurement for cost relative to weight, commonly used to express the cost of goods sold by weight.