1. There is a stock which grows at 200% per year for 1 years and after that it grows negatively at 1% per year forever. We assume that the stock goes up and down with the market 1.5 times. Its tax rate is .3, and the debt to equity ratio is 2.Also, the risk free rate is .04 and the risk premium is 5%. The dividend presently is $1. How much would you pay for the stock?

2. You will retire in 50 years. At that time, you will need $70,000 per year for 20 years. You will pursue a graduate professional degree for 2 years which will cost $80,000 per annum after 10 years from the present. Twenty years from now you estimate you will send your child to college , and it will cost you 60,000 per year for 4 years. You will provide nursing home care for your parents in 25 years. The care will be for 15 years. The expense per annum presently is 40,000, but it will rise by the rate of inflation of 3% annually. The nursing home facility will fix the annual expense at the time of admittance, however, the expense will rise as stipulated before that time. You can afford to save $15,000 annually for the first 20 years. Evaluate how much do you need to save from year 30 to 50 to accumulate enough for your retirement fund, if the ROR is 10%?