1. A company just paid a dividend of $2.16. The dividend is expected to grow at a rate of 3.5%. If it is required rate of return on the stock is 8.0% and the stock is currently priced at $49.20, should they buy or sell?

   • You should buy it: it is overvalued by $0.48.
   • You should buy it: it is undervalued by $0.48.
   • You should sell it: it is undervalued by $1.20.
   • You should sell it: it is overvalued by $1.20.
   • You should sell it: it is overvalued by $0.48.

2. 12 years ago, your aunt and uncle decided to invest their entire tax refund from Uncle Till of $2,896 in an account that earns a 6.5 percent annual interest. Assuming annual compounding, how much do they have in the account today?

   • $5,827.32
   • $6,023.44
   • $6,165.86
   • $6,218.03
   • None of the above