1. You purchased shares of stock one year ago at a price of $62.92 per share. During the year, you received dividend payments of $1.87 and sold the stock for $70.04 per share. If the inflation rate during the year was 2.27 percent, what was your real return?
14.32%
8.85%
16.88%
11.75%
10.59%
2. Tim is considering the purchase of a common stock that will not pay any dividend for next 3 years. The first dividend will be $2 in the end of year 4. He expects this stock to have a constant growth rate of 8 percent since then. If he requires a 12 percent rate of return, how much is he willing to pay for this stock?
A) 34.55
B) 35.59
C) 37.42
D) 39.28