Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return she is earning. Forexample, three years ago she paid $19,000 for 930 shares of Malti Company's common stock. She received a cash dividend of $735on the stock at the end of each year for three years. At the end of three years, she sold the stock for $22,000. Kathy would like to earna return of at least 17% on all of her investments. She is not sure whether the Malti Company stock provides a 17% return and would likesome 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 17% return?Complete this question by entering your answers in the tabs below.Required 1 Required 2Compute 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 1Required 2 >

Net present value is the difference between sum of present values of cash inflows and the initial…

Answered: Kathy Myers frequently purchases stocks…

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

See similar textbooks

Similar questions

6 years ago Mary purchased shares in a certain mutual fund at Net Asset Value (NAV) of $51. She reinvested her dividends into the fund, and today she has 7.6% more shares than when she started. If the fund's NAV has increased by 47.2% since her purchase, compute the rate of return on her investment if she sells her shares today. Round your answer to the nearest tenth of a percent.
Jillian invested $2,000 six years ago at 4.5 percent interest. She spends all of her interestearnings immediately, so she only receives interest on her initial $2,000 investment. How muchinterest is she earning each year?
Jason and Kerri Consalvo, both in their 50's, have $47,000 to invest and plan to retire in 10 years. They are considering two investments. The first is a utility company common stock that costs $47 per share and pays dividends of $2.35 per share per year (a 5% dividend yield). Note that these dividends will be taxed at the same rates that apply to long-term capital gains. The Consalvos do not expect the value of this stock to increase. The other investment under consideration is a highly rated corporate bond that currently sells for $1,000 and pays annual interest at a rate of 6.0%, or $60.00 per $1,000 invested. After 10 years, these bonds will be repaid at par, or $1,000 per $1,000 invested. Assume that the Consalvos keep the income from their investments but do not reinvest it (they keep the cash in a non-interest-bearing bank account). They will, however, need to pay income taxes on their investment income. If they buy the stock, they will sell it after 10 years.…
Bob has been investing $4, 750 in stock at the end of every year for the past 10 years. If the account is currently worth $73, 240, what was his annual return on this investment?
George recently received a great stock tip from his friend, Mason. George didn’t have any cash on hand to invest, so he decided to take out a $35,000 loan to facilitate the stock acquisition. The loan terms are 8 percent interest with interest-only payments due each year for five years. At the end of the five-year period the entire loan principal is due. When George closed on the loan on April 1, 2020, he decided to invest $28,000 in stock and to use the remaining $7,000 to purchase a four-wheel recreation vehicle. George is unsure how he will treat the interest paid on the $35,000 loan. In 2020, George paid $2,100 interest expense on the loan. (Hint: Visit https://www.irs.gov/ and consider IRS Publication 550.)What amount may he deduct as interest in 2020?
Derek is investing in a 401(k) that promises 5.99% annual growth. He plans on investing $180 each month for 30 years (there is no employer matching). Excel calculates an overall account balance of $180,467.25. How much of Derek's balance is interest?
At age 35, Ronald earns his MBA and accepts a position as a vice president of an asphalt company. Assume that he will retire at the age of 65, having received an annual salary of $105,000, and that the interest rate is 8%, compounded continuously. a) What is the accumulated present value of his position? b) What is the accumulated future value of his position?
Peter Gunderson bought 2,000 shares of stock in a transportation company at $45.10 per share. Ten months later he sold the stock at $78.22 per share. If he had to pay his broker a commission of $85, how much profit did Peter make on this investment? Round your answer to the nearest dollar.
Gerry is an entry-level engineer at Boeing Aerospace in California. He took a financial risk and bought a bond from a different corporation that had defaulted on its interest payments. The bond bought at 4240, is an 8% $10,000 bond with interest payable quarterly. The bond paid no interest for the first 3 years after Gerry bought it. If interest was paid for the next 7 years, and then Gerry was able to resell the bond for $11,000, what rate of return did he make on the investment? Assume the bond is scheduled to mature 18 years after he bought it. Plz do fast asap, urgent..
Your friend, Kitty Kardashian, of Hidden Hills, CA, bought $5,000 worth of mutual funds with a redemption fee of 5 percent if she sells within the first year. It decreases 1 percent each year afterward. If Kitty sells during the third year, how much will be the redemption fee?
Steven purchased 1000 shares of a certain stock for $25,700 (including commissions). He sold the shares 2 years later and received $33,400 after deducting commissions. Find the effective annual rate of return on his investment over the 2-year period. (Round your answer to two decimal places.) %/year
Mike and Emily each have invested $100, 000 in an investment account. No other contributions will be made to their investment account. Both have the sarne goal; they each want their account to reach $3,000,000 at which time each will retire. Mike has his money invested in risk free securities with an expected return of 12% compounded monthly. Emily has her money invested in a stock fund with an expected return of 15% compounded quarterly. How many years after Emily retires will Mike retire?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS