One-Period Example Suppose you are thinking of purchasing the stock of Moore Oil,Inc.You expect it to pay a $2 dividend in one year,and you believe that you can sell the stock for $14 at that time.If you require a return of 20%on investments of this risk,what is the maximum you would be willing to pay? Compute the PV of the expected cash flows 口Price=（14+2)/(1.2)=$13.33 OrFV=16;IY=20;N=1;CPT PV=-13.334 One-Period Example n Suppose you are thinking of purchasing the stock of Moore Oil, Inc. You expect it to pay a $2 dividend in one year, and you believe that you can sell the stock for $14 at that time. If you require a return of 20% on investments of this risk, what is the maximum you would be willing to pay? q Compute the PV of the expected cash flows q Price = (14 + 2) / (1.2) = $13.33 q Or FV = 16; I/Y = 20; N = 1; CPT PV = -13.33