Star Industries has not been growing since past 20 yearsbecause of certain legal hazards. It earns Rs. 15 per share per year and pays it all out tostockholders. The stockholders have alternative, equivalent-risk ventures yielding 20percent per year on average. What is the worth of one share of Star Industries?Assume the company can keep going indefinitely.
Mr. Daviswill retire at the age of 60. He expects to live 20 more years andto spend Rs. 55,000 a year during his retirement. How much money does he need to save by age 60 to support this consumption plan? Assume an interestrate of 7 percent.