Linda Clark received $220,000 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 $99,000. 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 $54,000. The stock paid a 7% dividend (based on par value) each year for three years. At the end of three years, the stock was sold for $40,000 c. Bonds were purchased at a cost of $81,000. The bonds paid annual interest of $4,500. After three years, the bonds were sold for $89,000 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 13% return, and he gave Linda the following computations to support his statement: Common stock: Gain on sale ($170,000 71,000 $99,000) Preferred stock: Dividends paid (7% x $54,000 x 11,340 3 years) Loss on sale ($40,000 (14,000) $54,000) Bonds Interest paid ($4,500 x 3 years) Gain on sale ($89,000 8,000 $81,000) Net gain on all investments s 89,840 $89,840 +3 years_ 13.6% $220,000 Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required: 1- Using a 13% discount rate, compute the net present value of each of the a. three investments. (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s).) Item Now 2 Common stock: Purchase of the stock Sale of the stock Total cash flows Discount factor Present value Net present value Preferred stock stock dividend Purchase of the Annual cash Sale of the stock Total cash flows Discount factor Present value Net present value Bonds Purchase of the bonds Annual interest income Sale of the bonds Total cash flows Discount factor Present value Net nresent value 1- b. on which investment(s) did Linda earn a 13% rate of return? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Common stock Bonds Preferred stock