You are considering preferred stock that pays a quarterly dividend of $1.50. If

Question

You are considering preferred stock that pays a quarterly dividend of $1.50. If your desired return is 3% per quarter, how much would you be willing to pay?

17.       An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually?

18.       What is the present value of the above if the payments are received at the beginning of each year?

19.       If you deposit those payments into an account earning 8%, what will the future value be in 10 years?

20.       What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?

Explanation / Answer

17. PMT=100, nper=10, rate=8%, fv=0, cpt for pv=?

Pv=A(pv(8%, 10, 100, 0)) = 671.0

18. PMT=100, nper=10, rate=8%, fv=0, type=1, cpt for pv=?

Pv=A(pv(8%, 10, 100, 0, 1)) = 724.69

20. Data insufficient

but he formula is

Pv=1000, pmt=100, rate =8%, nper=?, cpt for fv=?

Fv = abs(fv(8%, ?, 100,1000))

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