1. Holland Construction Co. has an outstanding 180-day bank loan of $397,000 at an annual interest rate of 9.7%. The company is required to maintain a 18% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount.
10.83%
14.83%
13.83%
11.83%
2. An issue of common stock's most recent dividend is $4.55. Its growth rate is 4.0%. What is its price if the market's rate of return is 8.0%
$118.75
$118.30
$56.88
$123.75