You just purchased a twelve year annuity. This investment earns 5.67% interest compounded annually and will pay you $28,000 in one year. Calculate the present value of this investment assuming the payments grow by 2.3% per year.

$248,168 $

267,722 $

282,902 $

159,122

You are trying to calculate the value today, of a share of Hot Spot Co. The firm is decreasing its annual dividend, paid in one year from today, to $6.45, and is setting a policy for the dividend to decrease by 2% annually thereafter. Assume the required rate of return is 23%.

1. $23.80

2. $25.28

3. $25.80

4. $31.33