1. Suppose you borrowed $50,000 at a rate of 4.5% and must repay it in 4 equal installments at the end of each of the next 4 years. How much interest would you have to pay in the first year? How much interest would you have to pay in the second year?
2. A stock just paid a dividend of $1. The required rate of return is rs = 12%, and the constant growth rate is 6%. What is the stock price three years from now?