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, three
Kathy Myers frequently purchases shares and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $20,000 for 200 common shares of Malti Company. She received a $620 cash dividend on the shares at the end of each year for three years. At the end of three years, she sold the shares for $22,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company shares provided a 14% return and would like some help with the necessary computations. Required: Using the NPV method, determine whether the Malti Company shares provided a 14% return. Round all computations to the nearest whole dollar.
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