Question
On Jan 2, Clint Harris paid $180,000 for 1154 shares of stock in the Phillips Diversified Manufacturing Company (PDI). Mr. Harris is a sitting Federal
On Jan 2, Clint Harris paid $180,000 for 1154 shares of stock in the Phillips Diversified Manufacturing Company (PDI). Mr. Harris is a sitting Federal Judge on the US Sixth Circuit Court of Appeals in Cincinnati, Ohio. PDI is a closely held company founded by Norman Phillips. Judge Harris purchased the shares upon the recommendation of George Stevens, an Investment Advisor in Lexington, KY. Mr. Harris received a $1.20 per share in dividends on the stock at the end of each year, except the dividend was increased by 20% in the fourth year. At the end of the fourth year, after the ex-dividend date, he sold all shares for $198,132. Clint's target return is 13% on all investments. What were the NPV and IRR on this investment? Did Mr. Harris achieve his goal? (Show your work for full credit).
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