1. Consider the stock of Gillette Company, which will pay an annual dividend of $14 at the end of the year. The dividend will grow at a constant annual rate of 1.7%, forever. The market requires a 3% return on the company’s stock, what is its fair market price?
2. Karen wants to have $25983 in her investment account in 8 years. If her bank offers an annual compound interest rate of 1.8% with monthly compounding, how much should she deposit today?