aspects 0] his lot), Hut he couldn't shake the-f ' Required: 1. What should Scott do? 7\" Would the use of post-audits solve the p submitted at the bank? Why or why not? 3_ Who should he involved in conducting the postaudit process? [Oblem 0f the overly Optimistic project proposals being CASE 1332 Net Present Value Analysis of Securities [L0] l Attila Vasquez received $1_60-000 from her mOther'S estate. She placed the funds in the hands of a broker '5' who purchased the followtng securities on Vasquez's behalf: . a ' a. Common shares were purchased at a cost of $80,000. The shares paid no dividends, but they were sold for $180,000 at the end of four years. b. Preferred shares were purchased at their par value of $30,000. The shares paid a 6% dividend (based on par value) each year for four years. At the end of four years, the shares were sold for $24,000. c. Bonds were purchased at a cost of $50,000. The bonds paid $3,000 in interest every six months. After four years, the bonds were sold for $58,500. (Note: In discounting a cash flow that occurs send-annually, the procedure is to halve the discount rate and double the number of periods. Use the same procedure in discounting the proceeds from the sale.) The securities were all sold at the end of four years so that Vasquez would have funds available to start new business venture. The broker stated that the investments had earned more than a 20% return annually. andhe gave Vasquez the following computation to support his statement: COmInon Shares; Gain on sale ($180,000 $30,000) ......................... s r00.000 Preferred shares: 7 200 Dividends paid (6% X $30,000 x 4 years) .................... (5,000) Loss. on sale ($24,000 $30,000) .......................... , ROMS: . 24,000 1m?\" paid ($3,000 x 8 periods) .......................... 3500 Gm\" 0'1 sale ($53,500 $50,000) .......................... $133,700 __._- _.__- Net gain or! all investments .................................. \"mum: ($133,700 + 4) + $160,000 = 20.9%