BUSN602 D003- Compound Frequency Payday loans are very short-term loans
1. Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $1,600 today and repay $1,872 in two weeks. What is the compound annual rate implied by this 17 percent rate charged for only two weeks?A. 20.40%B. 17.40%C. 5,826.97%D. 18.45%2. Balloons Inc normally pays a quarterly dividend. The last such dividend paid was $1.50, all future quarterly dividends are expected to grow at 6 percent, and the firm faces a required rate of return on equity of 15 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $2.70 per share that is not expected to affect any other future dividends, what should the stock price be?A. $17.27 B. $18.64 C. $16.20 D. $17.67
