1. A firm recently paid a $0.75 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $35. If the required return for this stock is 13.5 percent, what is its current value?
2. Andrew received $20,100 from Aunt Jane today. He is also able to save $10,000 at the end of each year. If he is able to earn 7.25% per year, how long will it take him to reach a goal of $120,000?
3. You are considering purchasing a new automobile that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 months (with payments made at the end of the month). Assuming you finance the entire $28,000 and finance through the dealer, your monthly payments will be closest to: