1. A stock sells for $50. The next dividend will be $2 per share. If the rate of return earned on reinvested funds is a constant 12% and the company reinvests 50% of earnings in the firm, what must be the discount rate?
2. You want to borrow $91,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,750, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 60-month APR loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Interest rate