1. ABC Corp. recently paid a dividend of $2. This dividend is expected to grow 10% per year for the next 3 years after which its dividend growth should normalize at a rate of 3% per annum. You estimate the company's cost of equity to be 10%. Given this, what is the value, today?

2. You pay 100,000 for a home with a 20% down payment. You own it for 18 years before you sell it. Although the home had no excess income or cash flow in the early years, annual rent increases enabled you to average $100 in excess monthly cash flow (All 18 years) after paying all expenses and the cost of the mortgage. After 18 years, you still owe the bank $45,000.

1) At what price did you sell the home assuming 3% inflation?

2) After paying back the bank, how much money did you have left?

3) What was the total return on your investment (including the down payment)?