A timeline depicting the important cashflows Your equations/substitution . The answer An example for a 4 cashflow timeline: It - 17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 495 0 0 0 0 0 0 o o o -688 o o o o o o 0 1 2 3 4 5 6 7 8 9 10 11 12 13 -319 0 0 0 392 CF An example for a annuity timeline: B D E F G H J K L M N 1 Value a $100 annuity that starts to pay today. It lasts for 12 years and has an interest rate of 12%. 2 3 Annuity value is calculated here (step 1 in blue), we need to move it forward one period to get the current value (step 2 in orange). 4 5 6 t -1 0 1 3 4 5 6 7 8 2 100 11 100 7 CF 100 100 100 100 100 100 100 9 10 100 100 Count: 100 8 12 What would an investor be willing to pay for a stock that has a dividend that a pays $2.72 at the end of the year, and grows by 4.5%, the stock has an expected rate of return of 11.1%? The investor's required rate of return is 16.55% and they plan on holding the stock for 6 years, and selling it for $44.95. Correct Answer $28.78 $36.58 $24.87 $30.61 You Answered $34.75