1. Sunrise Inc. expects to pay its next annual dividend of $2 a share. The firm recently announced that all future dividends will be increased by 4% annually. What is one share of this stock worth to you if you require a 11% rate of return?
2. Explain the importance of "present value of money".
3. What is the present value of $110 one year from now if you can get an annual risk free interest rate of 5%? Show your work.