1. Define an annuity and discuss why an annuity is so important when buying a car, buying a home or in a retirement plan, especially in the life of people that are not economically wealthy?
2. The March Madness Company just paid an annual dividend of $2.87. If you expect a constant growth rate of 3.95 percent, and have a required rate of return of 13.20 percent, what is the current stock price according to the constant growth dividend model?
Round the answer to two decimal places.