Question
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
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 $20,000 for 300 shares of Malti Companys common stock. She received a $258 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 $24,000. Kathy would like to earn a return of at least 15% on all of her investments. She is not sure whether the Malti Company stock provided a 15% return and would like some help with the necessary computations. (Ignore income taxes.) a. Determine the net present value. b. Did Kathy Myers earn 15% return on her investment?
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