1. Let's say a company pays a quarterly dividend. You just collected a $1 dividend today. Over the next five years, you expect the quarterly dividend to growth to the following amounts as of the end of each annual anniversary:

After 1 year, $1.1

After 2 years, $1.15

After 3 years , $1.25

After 4 years, $1.30

After 5 years, $1.45

1. Assuming annual compounding, what is the compounded annual growth rate of the dividend?

A) 7.7%

B) 9.1%

C) 6.7%

D) 8.7%

E) 9%

2. Installation costs are sunk costs that are not to be included as relevant in any capital budgeting decision.

True

False