Two-Period Example Now,what if you decide to hold the stock for two years?In addition to the $2 dividend in one year,you expect a dividend of $2.10 and a stock price of $14.70 both at the end of year 2.Now how much would you be willing to pay? ·PV=2/(1.2)+(2.10+14.70)/(1.2)2=13.33 ·Or CFo=0;C01=2;F01=1;C02=16.80;F02=1; NPV;I=20;CPT NPV=13.33 55 Two-Period Example n Now, what if you decide to hold the stock for two years? In addition to the $2 dividend in one year, you expect a dividend of $2.10 and a stock price of $14.70 both at the end of year 2. Now how much would you be willing to pay? § PV = 2 / (1.2) + (2.10 + 14.70) / (1.2)2 = 13.33 § Or CF0 = 0; C01 = 2; F01 = 1; C02 = 16.80; F02 = 1; NPV; I = 20; CPT NPV = 13.33