Question

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:

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%.


Suppose you plan to hold Von Bora stock for only one year. Your capital gain from holding Von Bora stock for the first year is?


Answer is $0.95

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