1. What is the difference between present and future values? How would you use present and future value techniques in preparing a long-term financial budget plan? How would various required rates of return affect the decision? Explain your answer
2. What’s the risk premium for the stock at a time when the risk free rate (e.g., T-Bill rate) is 4% and a stock with a beta of 1.5 is expected to yield 16%?