What should the exchange rate be five years from now what


1. Currently, you can exchange €100 for $124.15. The inflation rate in Europe is expected to be 3.3 percent as compared to 3.1 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be five years from now?

2. Winter Express just paid a $1 per share dividend. They plan to increase dividends by 10% per year for the next two years, then settle into a stable 4% growth rate. If the required return is 15%, what is the current price of this stock?

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