Question: You will receive $6,800 three years from now. The discount rate is 10 percent. c. What is the value of your investment today? Multiply your answer to part b by (1/1.10).
The value of investment today is $5,108.94.
Value of investment one years from now (FV1) = $5,619.83
Interest Rate (i) = 10%
Discount factor = 1.10
Question: Maxwell Communications paid a dividend of $3 last year. Over the next 12 months, the dividend is expected to grow at 8 percent, which is the constant growth rate for the firm (g). The new dividend after 12 months will represent D1. The required rate of return (Ke) is 14 percent. Compute the price of the stock (P0)
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