1. What is the maximum amount you will be willing to pay for a perpetuity that pays$700 given a market interest rate of 2%.

2. Suppose you borrow $10,000 at a rate of interest of 6% and agreed to make equal end of year payments for 5 years, what will be the annual payments?

a. $2,374.17

b. $2, 250.35

c. $3,00

3. Which of the following is typically a feature of preferred

a. They are paid dividends that grow at a constant rate.

:b. They are mostly noncumulative in nature.

c. They carry voting rights and have maturity date.

d. They are settled prior to common stocks during liquidation.