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Linda Clark received $221,000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the following securities on Linda's

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Linda Clark received $221,000 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 $110,000. The stock paid no dividends, but it was sold for 5190,000 at the end of three years b Preferred stock was purchased at its par value of $42.000 The stock paid a 4% dividend (based on par value) each year for three Bonds were purchased at a cost of $69,000. The bonds paid annual interest of $3,000. After three years, the bonds were sold for $74,000 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 $ 80,000 Connon stock: Gain on sale (5190,000 - $110,000) Preferred stock: Dividends paid (4 542,000 3 years) Loss on sale (528,000 - $42,000) Bonds: Interest paid ($3,000 3 years) Gain on sale (574,000 - 569,000) Net sain on all investments 5,040 (14,000) 9,000 5,000 $ 85,040 585,049 + 3 years 12.80 X $221,000 Click here to view Exhibit 1431 and Exhibit 148 2. to determine the appropriate discount factor(s) using tables Required: 1-a Using a 12% discount rate compute the net present value of each of the three investments 1-5. on which investment(s) did Linda earn a 12% fate of return? 2. Considering all three investments together did Linda earn a 12% rate of retur? 3. Linda wants to use the $292,000 proceeds ($190,000 - $28.000 $74,000 $292,000) from sale of the securities to open a retail store under a 12-year franchise contract. What minimum annual net cash intlow must the store generate for Unda to eam a 9% return over the 12-year period

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