Explore BrainMass
Share

Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year: Present value of future benefits

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

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.)

© BrainMass Inc. brainmass.com September 22, 2018, 11:30 am ad1c9bdddf - https://brainmass.com/business/the-time-value-of-money/89162

Solution Preview

We use the following formula to calculate the present ...

Solution Summary

The solution explains and shows the calculations to arrive at the answer.

$2.19