Eric will be retiring at the end of ten years from today. He is considering investing in a retirement investment plan offered by the bank. The plan will require Eric to pay $1.5 million dollars immediately. When Eric retires at the end of ten years, the investment plan will pay Eric $20,000 at the beginning of every month for the next twenty-five years. If the relevant interest rate is 6% a year compounded monthly, should Eric invest in this plan? 

Davison Group has just paid an annual dividend of $4. This dividend is expected to grow at 5 percent a year for the next two years. Starting from year 3, the company is expected to pay a fixed dividend of $3 a year forever. 

What is the current share price assuming a required return of 15 percent?

Answer rating: 100% (QA)

1 2 Dividend in year 1 Current Dividend 1 growth rate Dividend in year 1 4 1 5 Dividend in year 1 42... View the full answer