1) Superlative Engineering, Ltd has been growing at a non-constant, supernormal rate of 20% and this will last for the next three years. The last dividend paid by the company was $6.00. From that point onwards Superlative Engineering will grow at a rate of 6% indefinitely. If the company’s required rate of return is 16%, what is the value of the stock today?
2) A new investment on the market promises to pay you $2142 per year forever in exchange for a payment today of $28,000. What is the interest rate earned on the investment?