I would like to know the steps for the following questions. The answer is already given. Please dont use excel. Show me steps on a paper. 1. What is the value today of a 20-year annuity that pays $500 a year? The annuity's first payment occurs at the beginning of year 7. The annual interest rate 12% for years 1 through 5 and 20% thereafter. Answer: 1381.57

2. Starting at the end of next year, RBT is expected to pay $3/share in dividends every two years until year 8, after which the company is going to pay an annual dividend with a constant annual growth rate of 3% forever. The stated annual interest rate is 12%, compounded semi-annually, and the cost of equity is 15%. What is the current price of RBT's stock? Answer: 14.68

3. ETW Inc. just announced that it plans to cut its perpetual dividend from $2.00 to $1.75 per share. Before the announcement, its dividends were expected to have a 5% annual growth rate indefinitely. With the announcement, the dividend growth rate is expected to be 10% annually indefinitely. Under the assumption the risk of the firm's operations has not changed, the value of a share of ETW Inc, is currently $35. Before the announcement its stock value was closest to: Answer: 20$ 4. Five years ago, you bought a house and paid 1/5 of it as down payment.Your monthly mortgage has been $3,500.00. Your next payment, which is the 60th payment, is at the end of October and it is time to review your mortgage payment. The current interest rate on your mortgage is 3.651% (APR, compounded semi-annually). Assume that it is a 25-year mortgage. How much did you pay as down payment for your house five years ago? Answer: 172 490

4. MERS Inc. will pay a dividend of $1.60 in one year and $1.75 the year after. In one year you are going to buy some shares of MERS Inc, and sell them at the end of the following year for $25.00. If the discount rate is 10%, then your dividend yield is closest to: Answer: 7.20%