1. Winnimar Ince just paid a dividend of $2.20 on its common stock at the end of last year. Dividends next year are expected to be $1.95. You believe you can sell the stock for $20.50? If your required rate of return on this stock is 12%, how much are you willing to pay for the stock today?
2. If you want to have $7,963 in 20 months, how much money must you put in savings account today ? Assume that the savings account pays 5% and it is compounded monthly.