FSTI Holdings has the following investments in its portfolio, and you have been asked to determine their current market value.

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

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

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.