Question
1- Julio today turned 35 years, and he is planning to save $7,000 at the end of each year. He will invest at ABC Bank
1- Julio today turned 35 years, and he is planning to save $7,000 at the end of each year. He will invest at ABC Bank with 7.5% annual interest rate. Julio is planning to retire 30 years from today (at age 65), and he is expecting to live for 27 years after retirement. How much can he spend each year after he retires? (In $)
2- Facebook does not currently pay dividends but is expected to do so in three years time when the dividend per share is expected to be $6.50 and will grow at a perpetual rate of 3% thereon. Facebooks beta is 1.5, the equity risk premium is 8%, and the risk-free rate is 2%. What is the fair value of Facebooks stock? (In $)
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