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    cnichols33's Avatar
    cnichols33 Posts: 9, Reputation: 1
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    #1

    May 19, 2007, 08:23 PM
    Benefits of discount rates
    If someone invests in a stock that will pay dividends of $2.00 at the end of the first year; 2.20 at the end of the second year; and 2.40 at the end of the third year. Also, this person believes that at the end of the third year they will be able to sell the stock for $33 dollars. What is the present value of all future benefits if a discount rate of 11% is applied?

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    bunnyKutty's Avatar
    bunnyKutty Posts: 60, Reputation: 5
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    #2

    May 19, 2007, 08:47 PM
    Cash flows PV factor@11% Present value
    2 0.901 1.8
    2.2 0.812 1.79
    2.4 0.731 1.75
    30 0.731 21.93
    Net present value of future benefits = $27.27
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