1. Assume the McDonald's Big Mac hamburger in the U.S. costs $4.50 and the Big Mac in China costs 20 Chinese yuan. If you are a big believer of the PPP theory, what would you conclude about the value of Chinese yuan against the U.S. dollar according to the PPP?
2. South Side Corporation is expected to pay the following dividends over the next four years: $8, $6, $3, and $2. Afterward the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 13 percent, what is the current share price?