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1. What is the present value of $5,000 annual payments that starts 7 years from now and goes forever, if the discount rate is 10%?

2. What should the price be for a stock with the following characteristics? Beta : 2.0 Risk-free rate : 4.0% Expected Market Return : 14.0% Recent Dividend : $2.50 Constant Dividend Growth Rate : 6.0%

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