$**$READ CAPS FIRST$**$

USE EXCEL AND SHOW HOW TO SOLVE IN EXCEL ONLY!! SHOWING HOW TO SOLVE WITHOUT EXCEL DOESNT HELP AS ITS IN EXCEL!!! Problem $7-10$

Suppose Acap Corporation will pay a dividend of $$2\mathrm{.}80$ per share at the end of this year and a dividend of $$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 $10\%.$

Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy'paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel finction is to be used, the directions will specify the use of that fianction. Do not type in namerical data into a cell or fianction. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section.

a$.$ 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?

b$.$ 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?

c$.$ 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$)?$

Dividend in $1$ year

Dividend in $2$ years

Share price in $2$ years

Equity cost of capital

$\backslash$table$[[S,2\mathrm{.}80],[S,3\mathrm{.}00],[S,52$