Blockbuster Inc just paid a dividend of 2 per share. Dividends are expected to grow at a rate of -50 annually over the next three years. After that, it is expected that Blockbuster will cease paying dividends forever.
What is the fair market price for a share of Blockbuster if shareholders require a return of 12?
A) 0
B) 1.47
C) 1.61
D) 2.21
E) 2.95
Question 2
Shylock Bank offers a savings account with an effective interest rate of 9 and quarterly compounding. What is the nominal rate (APR) on the account?
A) 8.71
B) 8.00
C) 7.55
D) 6.00
E) 7.70
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