Linda Clark received $210,000 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 $98,000. The stock paid no dividends, but it was sold for $160,000 at the end of three years b. Preferred stock was purchased at its par value of $53,000. 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 $39,000 c. Bonds were purchased at a cost of $70,000. The bonds paid annual interest of $1,500. After three years, the bonds were sold for $86,000 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 12% return, and he gave Linda the following computations to support his statement: Common stock Gain on sale ($160,000 $98,000) $ 62,000 Preferred stock: Dividends paid (6% x $53,000 x 3 years) Loss on sale ($39,000 $53,000) 9,540 (14,000) Bonds Interest paid ($1,500 x 3 years) Gain on sale ($86,000 $70,000) 4,500 16,000 Net gain on all investments $ 78,040 $78,040 +3years $210,000 =12.4%