Check Linda Clark received $223,000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the following securities on Linda's behalf a. Common stock was purchased at a cost of $99,000. The stock paid no dividends, but it was sold for $161,000 at the end of three b. Preferred stock was purchased at its par value of $54,000. The stock paid a 6% dividend (based on par value) each year for three Bonds were purchased at a cost of $70,000. The bonds paid annual interest of $1500. After three years, the bonds were sold for years. $86,000 3712 The securities were all sold at the end of three years so that Linda would have funds available to open a new business venture. The broker stated that the investments had earned more than a 11% return, and he gave Linda the following computations to support his statement 1 ch $ 62,000 Connon stock: Gain on sale $161.000 - 599,000) Preferred stock Dividends paid $54,000 years) Loss 06 sale (539.000 - 554,000) Bonda Interest paid (51.500 ) years) Gain on sale (586,000 - $70,000) Het gain on all investments 9.720 (35,000) 4.500 16.000 $ 77,220 571.220 years 5723,000 - 11.50 Click here to view Exhibit M81 and Exhibit 40 2. to determine the appropriate discount factors) using tables 1. Using a 11% discount rate, compute the net present value of each of the three investments Required: 1b. On which investments) did Linda earn a 11% rate of return? 2. Considering all three investments together, did Linda earn a 11% rate of return? 3. Linda wants to use the $286,000 proceeds ($161,000+ $39,000+ $86,000 - $286,000) from sale of the securities to open a retail store under a 11-year franchise contract. What minimum annual net cash inflow must the store generate for Linda to earn a 10% return over the 11-year period? Prev 16 : Net