Question 2 (1) You are considering an investment in a no-load mutual fund; the fund charges a 12b-1 fee of 0.5% per year as well as an operating expense ratio of 1% per year. Alternatively, you can invest instead in a bank saving account paying 7% interest. If you plan to invest for five years, and the mutual fund promise that the fund portfolio will earn 8% per year in the first three years, then what annual rate of return must the fund portfolio earn in year 4 and year 5 for you to be better off in the fund than in the bank saving account? Assume annual compounding of returns. (8 Marks) I (2) Sandy Corporation is expected to pay the following dividends over the next four years: $12.00, $10.00, $8.00, $5.00. Afterwards, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 10 percent, what is the current share price? (7 Marks)