Price you would be willing to pay for share of the stock

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Reference no: EM131856698

1. An investment will pay you $300 a year for 8 years, (i.e., 8 payments), starting 4 years from today. What is the present value of the investment at a discount rate of 6%? Show your work.

2. Gulf States Refining is expected to pay a dividend of $1.95 per share next year. The dividend is expected to grow at a rate of 4% a year forever. If you require a 14% rate of return to invest in the stock, what is the maximum price you would be willing to pay for a share of the stock?

Reference no: EM131856698

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