1. Canton Corporation anticipates that it will earn firm FCFs of $4 million per year for each of the next five years. Beginning in year 6, the firm will earn FCF of $5 million per year for the indefinite future. If Canton's cost of capital is 12%, what is the value of the firm's future cash flows?
2. Suppose the spot and three-month forward rates for the yen are ¥102.17 and ¥101.22, respectively. a. Is the yen expected to get stronger or weaker? b. What would you estimate is the difference between the inflation rates of the United States and Japan? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16) Difference between the inflation rates %