Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return she is earning. For example, three years ago she paid $23,000 for 970 shares of Malti Companys common stock. She received a cash dividend of $805 on the stock at the end of each year for three years. At the end of three years, she sold the stock for $21,000. Kathy would like to earn a return of at least 10% on all of her investments. She is not sure whether the Malti Company stock provides a 10% return and would like some help with the necessary computations.

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. Compute the net present value Kathy earned on her investment in Malti Company stock.
2. Did the Malti Company stock provide a 10% return