1. Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent?
2. Why does the expectation of dividends differ from person to person? A substantial percentage of companes listed on the NYSE and the NADAQ don't pay dividends, but investors are nonetheless willing to buy shares in them. How is this possible given the answer to the previous question?