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2B- Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example,

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2B- 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: Using the net present value method, determine whether or not the Malti Company stock provided a 14% return. Round all computations to the nearest whole dollar. (3 marks) 2C- The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: (3 marks) Year Investment Cash Inflow $15.000 $ 8.000 1 2 3 4 5 6 7 8 9 10 $1.000 $2.000 $2,500 $4.000 $5.000 $6,000 $5,000 $4.000 $3.000 $2.000 Required: 1. Determine the payback period of the investment. (2 marks) 2. Would the payback period be affected if the cash inflow in the last year were several times as large? (1 mark)

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