a) Priscilla Mathhews is considering purchasing the common stock of Viper Boats Industries, a rapidly growing boat manufacturer. She finds that the firms most recent (2012) annual dividend payment was $1.50 per share. Priscilla estimates that these dividends will increase at a 10% annual rate, g1, over the next 3 years (2013, 2014, and 2015) because of the introduction of a hot new boat. At the end of the 3 years (the end of 2015), she expects the firms mature product line to result in a slowing of the dividend growth rate to 5% per year, g2, for the foreseeable future. Victorias required return, is 15%. What is the current value of Viper Boatss stock?

b) The following hypothetical exchange rates are available:

$1.6 /

100 / $

160 /

The hypothetical inflation rates in these countries are 20%, 15% and 10% per year for the U.S, Britain and Japan respectively. You are required to:

i) State the current exchange rates in terms of / $, $ / and /

ii) Compute the likely exchange rates for the three currency pairs for the next year (1.5 + 1.5 = 3 marks) c)

Consider a 30-year, fixed-rate mortgage loan at a nominal rate of 11% with a monthly installment of $1,500. If the purchase price of the property is $250,000, what is the percentage down payment required by the borrower?