Originally Posted by
husker12
Jack Hammer 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, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all future benefits if a discount rate of 11 percent is applied? (Round all values to two places to the right of the decimal point.)
$2.00/1.11 = 1.80
$2.20/ 1.11/1.11 = 1.79
$2.40/ 1.11 /1.11 /1.11 = 1.75
$33/ 1.11/1.11/1.11= 24.12
1.80+1.79+1.75+24.12 = $29.46