Consider a stock that will deliver cash flows (dividends) every year and forever. The amount of...

 

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Consider a stock that will deliver cash flows (dividends) every year and forever. The amount of first cash flow is $3. Since then, the cash flow will grow at 2% every year. The interest rate is 10%. (a) Suppose that the first cash flow comes in year 1 (no payment in year 0). What is the present value of this series of cash flows? (b) Suppose that the first cash flow comes in year 3 (no payment in years 0 through 2). What is the present value of this series of cash flows? (c) Suppose that the first cash flows come today. What is the present value of this series of cash flows? Consider a stock that will deliver cash flows (dividends) every year and forever. The amount of first cash flow is $3. Since then, the cash flow will grow at 2% every year. The interest rate is 10%. (a) Suppose that the first cash flow comes in year 1 (no payment in year 0). What is the present value of this series of cash flows? (b) Suppose that the first cash flow comes in year 3 (no payment in years 0 through 2). What is the present value of this series of cash flows? (c) Suppose that the first cash flows come today. What is the present value of this series of cash flows?