PLEASER ANSWER

1. Consider a cash flow of $400 per year on a car loan. Calculate the following and use two decimals. a) The Future value of an Ordinary Annuity with an interest rate of 10 % running for four years. (3 Marks) b) The Future value of an Annuity Due with an interest rate of 10 % running for three years (3 Marks) c) The Present value of an Ordinary Annuity with a discount rate of 7 % running for three years (3 Marks) d) The Present value in case of an annuity due at a discount rate of 5 % running for four years (3 Marks) 2. KDS Inc. is a new firm that is expected to grow at a 10% rate for 3 years. From then on, growth is expected to be 5% per year. The firm paid a dividend of $200 yesterday. The dividend is expected to grow at the same rate as the firm's growth rate. If the shareholders require a 20% return to hold the common stock, what is each share worth in the market? (8 Marks) NB: Refer to the slidesotes for formulas