Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $24,000 for 890 shares of Malti Company's common stock. She received a $837 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $25,000. Kathy would like to earn a return of at least 13% on all of her investments. She is not sure whether the Malti Company stock provide a 13% return and would like some help with the necessary computations. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 13% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value that Kathy earned on her investment in Malti Company stock. (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 >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required 1
Required 2
Did the Malti Company stock provide a 13% return?
OYes
ONo
Required 1
Required 2
Transcribed Image Text:Required 1 Required 2 Did the Malti Company stock provide a 13% return? OYes ONo Required 1 Required 2
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning.
For example, three years ago she paid $24,000 for 890 shares of Malti Company's common stock. She received a $837 cash
dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $25,000. Kathy
would like to earn a return of at least 13% on all of her investments. She is not sure whether the Malti Company stock provide a 13%
return and would like some help with the necessary computations.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:
1. Compute the net present value that Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 13% return?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute the net present value that Kathy earned on her investment in Malti Company stock. (Negative amounts should be
indicated by a minus sign. Round your final answer to the nearest whole dollar amount.)
Net present value
K Required 1
Required 2 >
Transcribed Image Text:Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $24,000 for 890 shares of Malti Company's common stock. She received a $837 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $25,000. Kathy would like to earn a return of at least 13% on all of her investments. She is not sure whether the Malti Company stock provide a 13% return and would like some help with the necessary computations. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 13% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value that Kathy earned on her investment in Malti Company stock. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value K Required 1 Required 2 >
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