Use the Information for the Question(s)below

question 8

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 to hold Von Bora stock for only one year.Your capital gain rate from holding Von Bora stock for the first year is closest to:

• A)3.5%.
• B)4.0%.
• C)6.0%.
• D)4.5%.

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Definitions:

Non-controlling Interest

Non-controlling interest is a portion of the equity in a subsidiary not owned directly or indirectly by the parent company, representing minority shareholders' interest in the subsidiary's net assets.

Equity Method

A method of accounting in which an investor recognizes its share of the profits and losses of an investee company in proportion to its ownership interest.

Fair Values

The estimated price at which an asset or liability could be exchanged in an orderly transaction between market participants at the measurement date.

Goodwill Balance

The remaining value of goodwill on a company's balance sheet after accounting for amortization or impairment.