Question 1 We expect a perpetuity of quarterly cash flows of $80,000 starting in 1 quarter. Given a discount rate of 5.75% per year compounded semi-annually, what is the present value of this perpetuity? Question 2 A zero-coupon bond has a face value of $1,000 and 20 years to maturity. If the effective annual yield to maturity of bonds of comparable risk is 8% per year, what is the price that you should be willing to pay for this bond? Question 3 Blue Corporation is expected to pay quarterly dividends of $0.35 per share. The dividend amount is expected to remain constant for the foreseeable future (in perpetuity). Given the risk of investing in Blue shares, the required expected return for investors is 16% effective per year. What would be the price of one share of Blue stock if the next dividend is in one month?