Suppose Lori agrees to lend her sister Holly $1000 for one year at a fixed nominal rate of interest. Suppose further that, at the time the loan is made, Lori expects the rate of inflation to be 4 percent and Holly expects it to be 2 percent over the course of the year. If the actual inflation rate turns out to be 3 percent, then Lori will be off and Holly will be off than expected, everything else held constant.

Randall's, inc. has 20,000 shares of stock outstanding with a par value of $1.00 per share. the market value is $12 per share. the balance sheet shows $42,000 in the capital in excess of par account, $20,000 in the common stock account, and $50,500 in the retained earnings account. the firm just announced a 5 percent (small) stock dividend. what will the balance in the retained earnings account be after the dividend?