Exercise 4 (Basic Net Present Value Analysis)On January 2, Pebbles Cruz paid P18,000 for 900 ordinary shares of RainbowCompany. Ms. Cruz received an P0.80 per share dividend on the shares at theend of each year for four years. At.the end of four years, she sold the share forP22,500. Ms. Cruz has a goal of earning a minimum return of 12% on all ofher investments.Required:(Ignore income taxes.) Did Ms. Cruz earn a 12% return on the share? Use thenet present value method and the general format. Round all computations tothe nearest whole peso.

Given: The cash outflow though Ms. Cruz is = P18,000 Shares value = 900 Life = 4 years The cash…

Answered: ebbles Cruz paid Cruz received an for…

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ebbles Cruz paid Cruz received an for four years. A 'ruz has a goal of

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Question

Exercise 4 (Basic Net Present Value Analysis)
On January 2, Pebbles Cruz paid P18,000 for 900 ordinary shares of Rainbow
Company. Ms. Cruz received an P0.80 per share dividend on the shares at the
end of each year for four years. At.the end of four years, she sold the share for
P22,500. Ms. Cruz has a goal of earning a minimum return of 12% on all of
her investments.
Required:
(Ignore income taxes.) Did Ms. Cruz earn a 12% return on the share? Use the
net present value method and the general format. Round all computations to
the nearest whole peso.

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