In relation to valuation using discounted cash flows:

(i) Write down and use a formula to find the discounted sum of an infinite set of the identical cash flows, C each year from year 1. Use 100 for C and 10% for the discount rate.

(ii) Write down and use a formula to find the discounted sum of an infinite set of the identical cash flows, C from year 1 growing at the same rate g per year? Use 100 for cash flow, 10% for the discount rate and 5% for the growth rate.

(iii) Use the table provided to repeat the exercise in (i) for the case of 20 years of cash flows.

(iv) Comment on the use of the price-earnings ratio in valuing a company