1. Scott will deposit $10,600 every other year beginning one year from today and ending in year 9. He will have $ ____ in his account 20 years from today. Assume a discount rate of 5% p.a.

a. 105,472.04

b. 107,037.63

c. 108,314.30

d. 109,136.41

e. 111,235.18

2. Jennifer works for FHG, Inc. She has just been told that the company plans to pay a dividend of $3.20 exactly one year from today (i.e., D1 = 3.20). If dividends are expected to grow at 4.10% each year thereafter, and if Jennifer believes that appropriate discount rate for FHG, Inc. stock is 12%, then she will calculate that the stock is currently worth $______.

a. 40.51

b. 41.56

c. 42.28

d. 43.84

e. 44.24

3. Alexis believes that the WRT Company will pay a dividend of $3.00 next year, $3.60 in year 2 and $3.90 in year 3. She believes that dividends will then grow at a constant rate of 3.90% forever. If the appropriate discount rate is 12%, then she values WRT Company stock at $ _____.

a. 40.48

b. 41.11

c. 42.41

d. 43.01

e. 43.93

4. Victoria is interested in adding some KLM, Inc. stock to her investment portfolio. She observes that the stock just paid a dividend of $4.00. Based on her estimates, dividends will grow at 20% for the next two years and 5% forever after that. Assuming a discount rate of 11.2%, Victoria knows that KLM, Inc. stock is worth $______.

a. 82.50

b. 83.62

c. 84.14

d. 85.10

e. 87.86

PLEASE SHOW YOUR WORK