Net Present Value Analysis 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 $13,000 for 200 shares of Malti Company’s common stock. She received a $420 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 $16,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provided a 14% 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 Round your answer to the nearest whole dollar. 2. Did the Malti Company stock provide a 14% return?
Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the
Required:
1. Compute the net present value that Kathy earned on her investment in Malti Company stock Round your answer to the nearest whole dollar.
2. Did the Malti Company stock provide a 14% return?
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