1. Franklin Corporation is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $55.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

a. 7.95%

b. 7.65%

c. 8.85%

d. 8.55%

e. 8.25%

2. Interest on a bank loan is typically most likely treated according to which of the following procedure?

A. Calculated and paid on a monthly basis

B. Calculated on a daily basis but paid monthly

C. Calculated on a monthly basis but paid daily

D. Calculated on an annual basis but paid monthly

E. Calculated on a monthly basis but paid annually