1. Tiger Transport has just developed a new process that will increase efficiency by 50%. TT is expecting to pay high dividends of 6.75 and 7.50 in the next two years. After that, the expectation is that competitors will also discover the new process and dividends will level off at 5%. The rate expected in the marketplace for investments similar to Tiger is 6.5%.

What is a share of Tiger Transport worth today? _________________

What will a share of Tiger Transport be worth in two years? ______________

What will a share of Tiger Transport be worth in three years? ____________

2. Use the formula to solve the following problem.

Henry just got his tax refund back ($2,400) and would like to put some away for a trip after

graduation. He estimates that he will need about $1750 for the trip he has in mind. Graduation is

two years away and he can deposit funds in an account that will pay him 6% compounded

quarterly. If Henry will not be depositing any more funds for the two years , how much must Henry

set aside now out of his tax refund check in order to have the $1750 for his trip in two years?