Use the Information for the Question(s)below

question 83

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%.
-Suppose you plan on purchasing Von Bora stock in one year,right after 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 capital gain rate that you will receive on your investment is closest to:

• A)4.00%.
• B)3.75%.
• C)6.25%.
• D)3.50%.

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Definitions:

English Civil War

A series of armed conflicts and political machinations between Parliamentarians ("Roundheads") and Royalists ("Cavaliers") in England in the mid-17th century.

Chesapeake

A region in the United States characterized by the Chesapeake Bay, significant for its historical role in the American colonies and its diverse ecosystems.

New England

A region in the northeastern United States, known for its distinct historical significance, cultural heritage, and role in the early settlement and formation of the country.

Indians

Refers to the indigenous peoples of the Americas; also used to denote people from the Republic of India.