Question 6 a) Priscilla Mathhews is considering purchasing the common stock of Viper Boats Industries, a rapidly growing boat manufacturer. She finds that the firm's most recent (2012) annual dividend payment was $1.50 per share. Priscilla estimates that these dividends will increase at a 10% annual rate, g, over the next 3 years (2013, 2014, and 2015) because of the introduction of a hot new boat. At the end of the 3 years (the end of 2015), she expects the firm's mature product line to result in a slowing of the dividend growth rate to 5% per year, g2, for the foreseeable future. Victoria's required return, is 15%. What is the current value of Viper Boats's stock? (7 marks) page 4 b) The following hypothetical exchange rates are available: $1.6/ 100 / $ 160 / The hypothetical inflation rates in these countries are 20%, 15% and 10% per year for the U.S, Britain and Japan respectively. You are required to: i) ii) State the current exchange rates in terms of /$, $ / and / Compute the likely exchange rates for the three currency pairs for the next year (1.5 +1.5 = 3 marks) c) Consider a 30-year, fixed rate mortgage loan at a nominal rate of 11% with a monthly installment of $1,500. If the purchase price of the property is $250,000, what is the percentage down payment required by the borrower