1. The retail price of the car is $20,000. Toyata is making the following offer: You pay $2,000 down and then $600 month for next 30 months. The APR is 12 percent (compounded monthly). This offer is equivalent to $ ___ off the retail price (when paid in cash today).
2. Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 6% and IR 6%. A stock with a beta of 1 on IP and 0.5 on IR currently is expected to provide a rate of return of 10%. If industrial production actually grows by 7%, while the inflation rate turns out to be 8%, what will be your expected rate of return on the stock, given the new information about the industrial production rate and the inflation rate?
(Enter your answer as a percentage rounded to 1 decimal places.)