Linda Clark received $160,000 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 $96,000. The stock paid no dividends, but it was sold for $170,000 at the end of three years. b. Preferred stock was purchased at its par value of $48,000. The stock paid a 6% dividend (based on par value) each year for three years. At the end of three years, the stock was sold for $34,000. c. Bonds were purchased at a cost of $75,000. The bonds paid annual interest of $4,500. After three years, the bonds were sold for $77,000. 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 16% return, and he gave Linda the following computations to support his statement: Common stock 74,000 Gain on sale ($170,000-$96,000) Preferred stock: Dividends paid (6% x $48,000 x 3 years) 8,640 Loss on sale ($34,000 $48,000) (14,000) Bonds: Interest paid ($4,500 x 3 years) 13,500 Gain on sale ($77,000 $75,000) 2,000 84,140 Net gain on all investments $84,140 3 years 17.5% $160,000