In 10 years, a firm will have annual cash flows of $100 million. Thereafter, its cash flows will grow at the inflation rate of 3%. If the applicable interest rate is 8%, estimate its value if you will sell the firm in 10 years? What would this be worth today? Show your work using the formula PV(0) = CF(1)/(k-g) * [ 1 [(1+g)/(1+k)]^n] ]

In 2000, the P/E ratio of the stock market reached about 45. If you assume that these corporations will grow roughly at the overall economys (GDP) growth rate of 4-5% per year, what should investors have reasonably expected in terms of a likely future rate of return implied by the stock markets level? Show your work.

An insurance company offers a retirement annuity that pays $100,000 per year for 15 years, growing at an inflation-compensator rate of 3%, and sells for $806,070. What is the interest rate? Show your work.