1. An investment offers $5,650 per year for 15 years, with the first payment occurring one year from now. If the required return is 8 percent, what is the value for the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?
2. Lohn Corporation is expected to pay the following dividends over the next four years: $13, $9, $8, and $3.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price?