1. Firefly Corporation has been growing at a rate of 20% per year. The growth is expected for another two years and then decline to 6%. If Firefly’s dividend is $1.60 and required rate of return is 10% what is Firefly stock worth today? If you owned the stock what would you recommend its price is trading at $50 per share.
2. Please explain the activity method and the limitations of the activity method.
3. A recent mining engineering graduate wants to purchase a new car in 5 years which presently costs $ 40,000 but the price of the car is rising at an annual compound rate of 12%. If he makes semiannual deposits to an account which pays 16 % compounded semiannually, how large must these payments be?