Adam has just graduated, and has a good job at a decent starting salary. He hopes to purchase his first new car. The car that Adam is considering costs $$65,000.$ The dealer has given him three payment options:

$1.$ Zero percent financing.$$Make a $$6,000$ down payment from his savings and finance the remainder with a $0\%$ APR loan for $72$ months. Adam has more than enough cash for the down payment, thanks to generous graduation gifts.

$2.$ Rebate with no money down.$$Receive a $$4,000$ rebate from the car dealer and finance the rest with a standard $72-$month loan, with an $5\mathrm{.}20\%$ APR. He likes this option, as he could think of many other uses for the $$6,000$ of his saving.

$3.$ Pay cash.$$Get the $$4,000$ rebate and pay the rest with cash. While Adam doesn$$t have balance of the car cost in hand, he wants to evaluate this option. His parents always paid cash when they bought a family car; Adam wonders if this really was a good idea.

Adam$$s fellow graduate, Jenna, has been trying to decide how much of her new salary she could save for retirement. Jenna is considering putting $$5,200$ of her annual savings in a stock fund. She just turned $23$ and has a long way to go until retirement at age $66,$ and she considers this risk level reasonable. The fund she is looking at has earned an average of $7\mathrm{.}50\%$ over the past $15$ years and could be expected to continue earning this amount, on average. While she has no current retirement savings, five years ago Jenna$$s grandparents gave her a new $30-$year U$.$S$.$ Treasu

Jenna wants to know her retirement income if she both $(1)$ sells her Treasury bond at its current market value and invests the proceeds in the stock fund and $(2)$ saves an additional $$5,200$ at the end of each year in the stock fund from now until she retires. Once she retires, Jenna wants those savings to last until she is $95.$

Case Questions$8.$ Should Jenna sell her Treasury bond and invest the proceeds in the stock fund? Give at least one reason for and against this plan.

$9.$ At the last minute, Jenna considers investing in Coca$-$Cola stock at a price of $$62\mathrm{.}44$ per share instead. The stock just paid an annual dividend of $$1\mathrm{.}80$ and she expects the dividend to grow at $1\mathrm{.}95\%$ annually. If the next dividend is due in one year, what expected return is Coca$-$Cola stock offering?Should Jenna sell her Treasury bond and invest the proceeds in the stock fund?

Question $8(4$ pts$)$:

against this plan?

Question $9(12$ pts$)$:

Coca$-$Cola stock