Question
Kathy Myers frequently purchases shares and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, four
Kathy Myers frequently purchases shares and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, four years ago she paid $26,250 for 250 common shares of Malti Company. She received a $525 cash dividend on the shares at the end of each year for four years. At the end of four years, she sold the shares for $28,875. Kathy would like to earn a return of at least 12% on all of her investments. She is not sure whether the Malti Company shares provided a 12% return and would like some help with the necessary computations. Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: Determine the net present value. (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answer to the nearest dollar amount.)
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