1. A firm does not pay a dividend. It is expected to pay its first dividend of $0.63 per share in two years. This dividend will grow at 10 percent indefinitely. Use an 11.5 percent discount rate. Compute the value of this stock?
2. A 15-year annuity of thirty $8,000 semiannual payments will begin 11 years from now, with the first payment coming 11.5 years from now.
If the discount rate is 9 percent compounded monthly, what is the value of this annuity 7 years from now?
What is the current value of the annuity?