1. Determine the present equivalent (at time zero) of a geometric gradient that begins with $1,000 at the end of year one and decreases by 10%. Let i = 15.5% per year.The total amount of year for 25 years. Draw the associated cash flow diagram.
2. A firm is planning on paying its first dividend of $2.7 3 years from today. After that, dividends are expected to grow at 4.3% per year indefinitely. The stock's required return is 15%. What is the intrinsic value of a share today?