1. Mary earns $100,000 per year. She plans to retire in 10 years and will live for 25 years after retiring. She can earn 8% on her money and inflation will average 3% per year. Using the capital depletion approach, how much will Mary need on the day she retires to fund her retirement if she wants her annual retirement income to increase each year to match inflation?
$1,723,295
$1,612,297
$1,810,293
$1,537,294
2. A preferred stock that pays a constant dividend of $1.20 currently sells for $16.00. What is the required rate of return?
A. 7.5%
B. 9.8%
C. 12.4%
D. 14.0%