1. What is the fair value of the stock for which no dividend will be paid for next three years, but $1.00 dividend per share will be paid 4 years from now and then will grow at 7% every year? Assume that the discount rate is 10%.

a. $7.76 b. $10.74 c. $15.03 d. $25.04

2. A mortgage company offers to lend you $75,000; the loan calls for payments of $13,164.50 per year for ten years. What interest rate is the mortgage company charging you?

a. 5.95% b. 7.97% c. 11.80% d. 15.39%