1. Suppose a friend lends you $2,000, and you agree to pay him back $2,345 in 4 years, what is the interest rate on this loan?

2. You are considering the purchase of ABC Inc. stocks. You found that that they will pay $3 of dividends per share and the predicted sales price of the stock is $120 per share. Your required return on investment in equity is 5%, and the current stock of ABC Inc. trades at $118 per share. What is the current price of the ABC Inc. stock? Is the selling price higher or smaller than its valuation price? Would you purchase this stock?

Answer rating: 100% (QA)

1 The interest rate on this loan is 11625 2 The current price of the ABC Inc stock is 118 The sellin... View the full answer