$1.$ Grenouille Properties $($U$.$S$.)$ expects to receive cash dividends from a French

joint venture over the coming three years. The first dividend, to be paid December $31,2011,$ is expected to be $720,000.$ The dividend is then expected to grow $10\mathrm{.}0\%$

per year over the following two years.

The current exchange rate $($December $30,2010)$ is $$1\mathrm{.}3603/.$ Grenouille$$s weighted average cost of capital is $12\%.$

$$

B$.$ What is the present value of the expected euro dividend stream if the euro

is expected to appreciate $4\mathrm{.}00\%$ per annum against the dollar?

What is the present value of the expected dividend stream if the euro

were to depreciate $3\mathrm{.}00\%$ per annum against the dollar?