1. Hans placed $5,000 in a trust fund for Leonore. In 10 years the fund will be worth $10,000. What is the effective annual rate of return on the trust fund?

A. 5.95%

B. 6.21%

C. 6.50%

D. 6.70%

E. 6.92%

F. 7.18%

G. 8.01%

H. 8.50%

I. None of the above

2. Enterprise Inc. has a dividend yield of 4%. The stock currently trades for $30 and the dividend is expected to grow at 2% annually. What is the annual required return on the stock?

A. $1

B. $2

C. 2%

D. 3%

E. 4%

F. 5%

G. 6%

H. 8%

I. None of the above

3. One Weed One Planet is a new company with lots of growth potential. You believe that the company will pay no dividend for the next 10 years. Subsequently, you estimate the company will pay a $1 quarterly dividend that will then grow at 0.5% each quarter. How much are you willing to pay for the stock if your required annual return is 20% with quarterly compounding?

A. $30.00

B. $28.84

C. $25.01

D. $22.18

E. $20.00

F. $18.28

G. $16.75

H. $3.16

I. None of the above

4. Leonore wants to ask for Fidelio’s hand in marriage. She is able to pay $250 at the end of each month for 6 years. If the interest rate is 8 percent annually with monthly compounding (an APR), how much can she afford to borrow to purchase Fidelio an engagement ring?

A. $1,450.23

B. $2,394.33

C. $5,230.03

D. $7,483.00

E. $10,001.99

F. $14,258.63

G. $16,154.54

H. $79,320.94

I. None of the above