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Net Present Value Analysis of Securities Anita Vasquez received $ 1 6 0 , 0 0 0 from her mother s estate. She placed the
Net Present Value Analysis of Securities
Anita Vasquez received $ from her mothers estate. She placed the funds in the hands of broker, who purchased the following securities on Vasquezs behalf.
a Common shares were purchased at cost of $ The shares paid no dividends, but they were sold for $ at the end of four years.
b Preferred shares were purchased at their par value of $ The shares paid dividend based on par value each year for four years. At the end of four years, the shares sold for $
c Bond were purchased at a cost of $ The bonds paid $ in interest every six months. After four years, the bonds were sold for $Note: In discounting a cash flow that occurs semiannually, the procedure is to halve the discount rate and double the number of periods. Use the same procedure in discounting the proceeds from the sale
The securities were all sold at the end of four years so that Vasquez would have funds available to start a new business venture. The broker stated that the investments had earned more than a return annually, and he gave Vasquez the following computation to support his statement:
Required:
Ignore income taxes.
Using a discount rate, compute the net present value of each of the three investments. On which investments did Anita earn a rate of return? Round computations to the nearest whole dollar.
Considering all three investments together, did Anita earn a rate of return? Explain.
Anita wants to use the $ in proceeds $ $ $ $ from sale of the securities to open a fastfood franchise under a year contract. What net annual cash inflow must the store generate for Anita to a return over the year period? Anita will not receive back her original investment at the end of the contract. Round computations to the nearest whole dollar
please give me a detailed answer and explanation asap
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