Question

1, Your parents deposit $10,000 into your bank account and allow you to withdraw $500 every month for living expenses in 2 years to support your MBA education. What annual interest rate does the bank pay so that you will withdraw everything in 2 years? Please round your answer to the fourth decimal. For example, if your answer is 1%, you should input 0.0100.

2, A preferred stock pays an annual dividend of $1.01 per share forever. The appropriate interest rate for the preferred stock is 7.57%. How much do you need to pay today to acquire this preferred stock? Please round your answer to the second decimal without dollar sign. E.g. 1.11

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -