Idyllic Inc. operates under ideal conditions of certainty. It has a capital asset that will generate $1,000 twice: first, at the end of the first year, and second, at the end of the second year of its operation. The discount rate is 10%.

Required:

A. Calculate the present value of the firm at the beginning of the first year. Show calculations.

B. Calculate the net income of the firm for its second year of operation if the firm pays a $50 dividend at the end of the first year. Show calculations.