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 $22,000 for 900 shares of Malti Company's common stock. She received a $684 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 $22,000. Kathy would like to earn a return of at least 9% on all of her investments. She is not sure whether the Malti Company stock provide a 9% 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 that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 9% return?
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 $22,000 for 900 shares of Malti Company's common stock. She received a $684 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 $22,000. Kathy would like to earn a return of at least 9% on all of her investments. She is not sure whether the Malti Company stock provide a 9% 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 that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 9% return?
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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Please help with #1 thank you!
![Exercise 14-10 (Algo) Net Present Value Analysis [LO14-2]
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 $22,000 for 900 shares of Malti Company's common stock. She received a $684 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 $22,000. Kathy would like to earn a
return of at least 9% on all of her investments. She is not sure whether the Malti Company stock provide a 9% 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 that Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 9% 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 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d6fa1e9-36c0-4861-8dbf-8c72fa6219f2%2F7f8b70d3-2025-4ba9-afed-2c01227acc26%2Fn6d3x41_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 14-10 (Algo) Net Present Value Analysis [LO14-2]
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 $22,000 for 900 shares of Malti Company's common stock. She received a $684 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 $22,000. Kathy would like to earn a
return of at least 9% on all of her investments. She is not sure whether the Malti Company stock provide a 9% 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 that Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 9% 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 >
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