# what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years

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what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years

“A manufacturing company is considering a new investment in a machine that will cost \$170,000 and has a maintenance cost of \$5,700 that occurs every 2 years starting at the end of year 2. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at the rate of 13.6%? Enter your answer as a positive number.”

Suppose Acap Corporation will pay a dividend of \$2.80 per share at the end of this year and a dividend of \$3 per share next year. You expect Acap’s stock price to be \$52 in two years. Assume that Acap’s equity cost of capital is 10%.

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What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years? (Answer: \$48)

Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one year? (Answer: \$50)

Given your answer to (b), what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for one year? How does this price compare to your answer in (a)? (Answer: the same, \$48)

what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years

what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years

what price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two years

What price would you be willing to pay for a share of Acap stock today, if you planned to hold the stock for two year