1. Martin's Yachts is expected to pay annual dividends of $1.40, $1.75, and $2.00 a share over the next three years, respectively. After that, the dividend is expected to remain constant. What is the current value per share at a discount rate of 14 percent.
2. The intrinsic value of a share of stock is equal to today's value of all expected future cash flows to be received by an investor. The more risk the stock exposes the investor to, the less the investor shall be willing to pay. Support this thought with only two principles of finance.