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 $20,000 for 940 shares of Malti Company's common stock. She received a $752 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 $23,000. 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. Required:
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 $20,000 for 940 shares of Malti Company's common stock. She received a $752 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 $23,000. 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. Required:
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 that she is earning. For
example, three years ago she paid $20,000 for 940 shares of Malti Company's common stock. She received a $752 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 $23,000. 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.
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.
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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