Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return she is earning. For example, three years ago she paid $33,000 for 880 shares of Malti Company's common stock. She received a cash dividend of $818 on the stock at the end of each year for three years. At the end of three years, she sold the stock for $32,000. Kathy would like to earn a return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provides a 7% return and would like some help with the necessary computations. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 7% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value Kathy earned on her investment in Malti Company stock. Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Net present value < Required 1 Required 2 >
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return she is earning. For example, three years ago she paid $33,000 for 880 shares of Malti Company's common stock. She received a cash dividend of $818 on the stock at the end of each year for three years. At the end of three years, she sold the stock for $32,000. Kathy would like to earn a return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provides a 7% return and would like some help with the necessary computations. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 7% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value Kathy earned on her investment in Malti Company stock. Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Net present value < Required 1 Required 2 >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return she is earning. For
example, three years ago she paid $33,000 for 880 shares of Malti Company's common stock. She received a cash dividend of $818
on the stock at the end of each year for three years. At the end of three years, she sold the stock for $32,000. Kathy would like to earn
a return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provides a 7% return and would like
some help with the necessary computations.
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 7% return?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the net present value Kathy earned on her investment in Malti Company stock.
Note: Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.
Net present value
< Required 1
Required 2 >
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