1. Myers Travel service recently paid $1 to its shareholders as the quarterly dividend. Simultaneously, the company announced that future dividends will be increasing by 1 percent quarterly. If you require a 10 percent annual rate of return with quarterly compounding, how much are you willing to pay to purchase one of this stock?
2. You can purchase a house boat for $150,000. You anticipate that you can generate $16000 in rental income each year (received at the end of the year) for the next 10 years by leading the house boat. You also anticipate selling the time share for $160,000 (after taxes) at the end of 10 years. What is the NPV of this investment if the cost of capital is 14%?