[jones4318]

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.)

[Hermansherman]

Present Value calculation

$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