Your friend is talking to you about one of their investments. They stated that they invested in I-Cant-Believe-It a few years ago. Yesterday, your friend received a cheque from the investment for $5,000. According to the companys annual report and forecast, the company expects the amount of the cash flow to increase or grow at 15 percent for the next 5 years and then to grow at 2 percent forever. (Include a time line that contains the relevant information for each problem.)

1. If you require a 15 percent return on your investment, what is the value of this investment today? (4 marks)
2. If interest rates are 15 percent per year and the first cash flow of $5,000 occurs three months from now, what is this investment worth today? (4 marks)
3. If the first cash flow of $5,000 occurs today, what is the value of the investment today? (4 marks)