1. Demarius owns investment A and 1 share of stock B. The total value of his holdings is 1,436.9 dollars. Investment A is expected to pay annual cash flows to Demarius of 210 dollars per year with the first annual cash flow expected later today and the last annual cash flow expected in 5 years from today. Investment A has an expected annual return of 4.44 percent. Stock B is expected to pay annual dividends of 37.75 dollars forever with the next dividend expected in 1 year. What is the expected annual return for stock B? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
2. A stock has an expected annual return of 12.65 percent and is expected to pay annual dividends forever. The first annual dividend is expected in 1 year and all subsequent annual dividends are expected to grow at a constant rate of 3.07 percent per year. The dividend expected in 1 year from today is expected to be 12.27 dollars. What is the present value (as of today) of the dividend that is expected to be paid in 5 years from today?