1. A stock with a constant dividend growth rate of 5% is expected to make a $2 dividend in one year. If you require a 12% return on your investment, which of the following statements is INCORRECT?
A. The current stock price is $28.57.
B. The dividend yield is 7%.
C. The capital gains yield is 12%.
D. The stock price will grow at an annual 5%.
2. If Mary currently has $250,000 in her 401(k) plan earning 8%, how much will this be worth in 10 years when she retires if she continues to contribute $8,000 per year at the end of each year?
$743,522
$701,319
$655,624
$539,731