1. Franklin Corporation is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $55.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
a. 7.95%
b. 7.65%
c. 8.85%
d. 8.55%
e. 8.25%
2. Interest on a bank loan is typically most likely treated according to which of the following procedure?
A. Calculated and paid on a monthly basis
B. Calculated on a daily basis but paid monthly
C. Calculated on a monthly basis but paid daily
D. Calculated on an annual basis but paid monthly
E. Calculated on a monthly basis but paid annually