You invest in Louis Lane Company an expect the following stream of CFs:

$300 in year 1

$475 in year 2

$250 in year 3

Starting year 4 you have some good reasons to expect your CFs to constantly grow at 5% forever and interest rate is 15%

1. What is the terminal value?

1. What is the value of this investment?

Suppose that the company has 1000 outstanding shares.

2. What is the intrinsic value?

You have heard there is an opportunity to buy stocks of this company at $3 per share.

3. Is it a good deal or not? why?