[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.)

[shelton356]

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.)

Did you get the answer to this. I'm going to uop and the Eresource book is no help, if so email me at [email protected]

[terryg752]

I am not sure but I think it will be like this:

This is how you should calculate:

Suppose discount rate is r%

1. Present Value for something you will get after 1 year

Value of 100 after 1 year is 100 (1 +r/100) = say x

Present value of x = 100

Present value of 1 = 100/x

Present Value of $2 = 200/x

2. Present Value for something you will get after 2 years

Value of 100 after 2 years is 100 (1 +r/100)^2 = say y

Present value of y = 100

Present value of 1 = 100/y

Present value of 2.20 = 2.20 times 100/y

3. Present Value for something you will get after 1 year

Value of 100 after 3 year is 100 (1 +r/100)^3 = say z

Present value of z = 100

Present value of 1 = 100/z

Present value of 2.40 = 2.40 times 100/z

Present value of 33 = 33 times 100/z

[Hermansherman]

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