FSTI Holdings has 4 major investments in its portfolio, and you have been asked to determine their current market value. Its holdings are as follows:

2. It owns 250,000 shares of Cornwall Systems, for which it paid $15 per share in 2003. Cornwall’s dividend has been growing at a steady rate of 2.8% per year. Given the somewhat risky nature of the company’s business model, the market’s required return on its shares is 8.5%.

Calculate the current value of each of these holdings, using the following assumptions.

2. Cornwall Systems has recently gone private, and thus does not have a quoted market price per share. However, it continues to pay dividends regularly, and its most recent dividend was $1.70, and is still expected to grow at 2.8% per year. However, as a privately-held company, an additional liquidity premium of 1.5% needs to be added to its required return.