Answer the following questions. Table 6-4 or Table 6-5. (Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.) Required:

1. Spencer Co.'s common stock is expected to have a dividend of $7 per share for each of the next 14 years, and it is estimated that the market value per share will be $116 at the end of 14 years. If an investor requires a return on investment of 6%, what is the maximum price the investor would be willing to pay for a share of Spencer Co. common stock today?
2. Mario bought a bond with a face amount of $1,000, a stated interest rate of 6%, and a maturity date 18 years in the future for $988. The bond pays interest on an annual basis. Three years have gone by and the market interest rate is now 14%. What is the market value of the bond today?
3. Alexis purchased a U.S. Series EE savings bond for $350, and eight years later received $647.79 when the bond was redeemed. What average annual return on investment did Alexis earn over the eight years?

TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 1 2 3 0.980 0.961 0.942 0.924 0.906 0.9615 0.9246 0.8890 0.8548 0.8219 0.9434 0.8900 0.8396 0.7921 0.7473 0.9259 0.8573 0.7938 0.7350 0.6806 0.9091 0.8264 0.7513 0.6830 0.6209 0.8929 0.7972 0.7118 0.6355 0.5674 0.8772 0.7695 0.6750 0.5921 0.5194 0.8621 0.7432 0.6407 0.5523 0.4761 0.8475 0.7182 0.6086 0.5158 0.4371 0.8333 0.6944 0.5787 0.4823 0.4019 4 5 6 0.888 0.871 7 0.7903 0.7599 0.7307 0.7026 0.6756 8 0.7050 0.6651 0.6274 0.5919 0.5584 0.6302 0.5835 0.5403 0.5002 0.4632 0.853 0.837 0.820 0.5645 0.5132 0.4665 0.4241 0.3855 0.5066 0.4523 0.4039 0.3606 0.3220 0.4104 0.3538 0.3050 0.2630 0.4556 0.3996 0.3506 0.3075 0.2697 0.3704 0.3139 0.2660 0.2255 0.3349 0.2791 0.2326 0.1938 0.1615 9 10 0.2267 0.1911 11 12 13 0.804 0.788 0.773 0.758 0.743 0.6496 0.6246 0.6006 0.5775 0.5553 0.5268 0.4970 0.4688 0.4423 0.4173 0.4289 0.3971 0.3677 0.3405 0.3152 0.3505 0.3186 0.2897 0.2633 0.2394 0.2875 0.2567 0.2292 0.2046 0.1827 0.2366 0.2076 0.1821 0.1597 0.1401 0.1954 0.1685 0.1452 0.1252 0.1079 0.1619 0.1372 0.1163 0.0985 0.0835 0.1346 0.1122 0.0935 0.0779 0.0649 14 15 16 0.728 0.714 17 18 0.5339 0.5134 0.4936 0.4746 0.4564 0.700 0.686 0.673 0.3936 0.3714 0.3503 0.3305 0.3118 0.2919 0.2703 0.2502 0.2317 0.2145 0.2176 0.1978 0.1799 0.1635 0.1486 0.1631 0.1456 0.1300 0.1161 0.1037 0.1229 0.1078 0.0946 0.0829 0.0728 0.0930 0.0802 0.0691 0.0596 0.0514 0.0708 0.0600 0.0508 0.0431 0.0365 0.0541 0.0451 0.0376 0.0313 0.0261 19 20 21 0.660 0.647 22 0.2942 0.2775 0.2618 23 0.4388 0.4220 0.4057 0.3901 0.3751 0.634 0.622 0.610 0.1987 0.1839 0.1703 0.1577 0.1460 0.1351 0.1228 0.1117 0.1015 0.0923 0.0926 0.0826 0.0738 0.0659 0.0588 0.0638 0.0560 0.0491 0.0431 0.0378 0.0443 0.0382 0.0329 0.0284 0.0245 0.0309 0.0262 0.0222 0.0188 0.0160 0.0217 0.0181 0.0151 0.0126 0.0105 24 25 0.2470 0.2330 30 35 40 0.552 0.500 0.453 0.410 0.372 0.3083 0.2534 0.2083 0.1712 0.1407 0.1741 0.1301 0.0972 0.0727 0.0543 0.0994 0.0676 0.0460 0.0313 0.0213 0.0573 0.0356 0.0221 0.0137 0.0085 0.0334 0.0189 0.0107 0.0061 0.0035 0.0196 0.0102 0.0053 0.0027 0.0014 0.0116 0.0055 0.0026 0.0013 0.0006 0.0070 0.0030 0.0013 0.0006 0.0003 0.0042 0.0017 0.0007 0.0003 0.0001 45 50 TABLE 6.5 FACTORS FOR CALCULATING THE PRESENT VALUE OF AN ANNUITY OF $1 Discount Rate No. of Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 1 2 3 0.980 1.942 2.884 3.808 4.713 0.9615 1.8861 2.7751 3.6299 4.4518 0.9434 1.8334 2.6730 3.4651 4.2124 0.9259 1.7833 2.5771 3.3121 3.9927 0.9091 1.7355 2.4869 3.1699 3.7908 0.8929 1.6901 2.4018 3.0373 3.6048 0.8772 1.6467 2.3216 2.9137 3.4331 0.8621 1.6052 2.2459 2.7982 3.2743 0.8475 1.5656 2.1743 2.6901 3.1272 0.8333 1.5278 2.1065 2.5887 2.9906 4 5 6 7 8 5.601 6.472 7.325 8.162 8.983 5.2421 6.0021 6.7327 7.4353 8.1109 4.9173 5.5824 6.2098 6.8017 7.3601 4.6229 5.2064 5.7466 6.2469 6.7101 4.3553 4.8684 5.3349 5.7590 6.1446 4.1114 4.5638 4.9676 5.3282 5.6502 3.8887 4.2883 4.6389 4.9464 5.2161 3.6847 4.0386 4.3436 4.6065 4.8332 3.4976 3.8115 4.0776 4.3030 4.4941 3.3255 3.6046 3.8372 4.0310 4.1925 9 10 11 12 13 9.787 10.575 11.348 12.106 12.849 8.7605 9.3851 9.9856 10.5631 11.1184 7.8869 8.3838 8.8527 9.2950 9.7122 7.1390 7.5361 7.9038 8.2442 8.5595 6.4951 6.8137 7.1034 7.3667 7.6061 5.9377 6.1944 6.4235 6.6282 6.8109 5.4527 5.6603 5.8424 6.0021 6.1422 5.0286 5.1971 5.3423 5.4675 5.5755 4.6560 4.7932 4.9095 5.0081 5.0916 4.3271 4.4392 4.5327 4.6106 4.6755 14 15 16 17 18 13.578 14.292 14.992 15.678 16.351 11.6523 10.1059 12.1657 10.4773 12.6593 10.8276 13.1339 11.1581 13.5903 11.4699 8.8514 9.1216 9.3719 9.6036 9.8181 7.8237 8.0216 8.2014 8.3649 8.5136 6.9740 7.1196 7.2497 7.3658 7.4694 6.2651 6.3729 6.4674 6.5504 6.6231 5.6685 5.7487 5.8178 5.8775 5.9288 5.1624 5.2223 5.2732 5.3162 5.3527 4.7296 4.7746 4.8122 4.8435 4.8696 19 20 21 22 23 17.011 17.658 18.292 18.914 19.523 14.0292 11.7641 14.4511 12.0416 14.8568 12.3034 15.2470 12.5504 15.6221 12.7834 10.0168 10.2007 10.3711 10.5288 10.6748 8.6487 8.7715 8.8832 8.9847 9.0770 7.5620 7.6446 7.7184 7.7843 7.8431 6.6870 6.7429 6.7921 6.8351 6.8729 5.9731 6.0113 6.0442 6.0726 6.0971 5.3837 5.4099 5.4321 5.4509 5.4669 4.8913 4.9094 4.9245 4.9371 4.9476 24 25 30 35 40 45 22.396 24.999 27.355 29.490 31.424 17.2920 13.7648 18.6646 14.4982 19.7928 15.0463 20.7200 15.4558 21.4822 15.7619 11.2578 11.6546 11.9246 12.1084 12.2335 9.4269 9.6442 9.7791 9.8628 9.9148 8.0552 8.1755 8.2438 8.2825 8.3045 7.0027 7.0700 7.1050 7.1232 7.1327 6.1772 6.2153 6.2335 6.2421 6.2463 5.5168 5.5386 5.5482 5.5523 5.5541 4.9789 4.9915 4.9966 4.9986 4.9995 50