1. Today is T=0. You borrow $300,000 today at a rate of interest of 5%. You agree to repay the loan in 6 equal, annual installments. The first payment is to be made at T=1. What is the amount of the principal reduction associated with the third payment? Answer 2. Today is T=0. A company paid a dividend of $4.00 yesterday. Dividends are expected to grow at a rate of 8% for three years, 7% for one year and then at a rate of 6%, forever. The required return is 12% and is never expected to change. Estimate the equilibrium price of a share of stock at T=0. PROVE YOUR ANSWER Answer IF