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ONLY NEED HELP FINDING THE NET PRESENT VALUE FOR BONDS ONLY! Linda Clark received $223,000 from her mother's estate. She placed the funds into the
ONLY NEED HELP FINDING THE NET PRESENT VALUE FOR BONDS ONLY!
Linda Clark received $223,000 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 $161,000 at the end of three years b. Preferred stock was purchased at its par value of $54,000. 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 11% return, and he gave Linda the following computations to support his statement: Common stock: Gain on sale ($161,000 - $99,000) 62,000 Preferred stock: Dividends paid (6% x $54,000 x 3 years) Loss on sale ($39,000 $54,000) 9,720 (15,000) Bonds: Interest paid ($1,500 x 3 years) Gain on sale ($86,000-$70,000) 4,500 16,000 $ 77,220 Net gain on all investments Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required 1-a. Using a 11% discount rate, compute the net present value of each of the three investments. 1-b. On which investment(s) did Linda earn a 11% rate of return? 2. Considering all three investments together, did Linda earn a 11% rate of return? 3. Linda wants to use the $286,000 proceeds ($161,000 + $39,000 + $86,000 = $286,000) from sale of the securities to open a retail store under a 11-year franchise contract, what minimum annual net cash inflow must the store generate for Linda to earn a 10% return over the 11-year period? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req 3 Using a 11% discount rate, compute the net present value of each of the three investments. (Enter negative amounts with a minus sign. Round computations to the nearest whole dollar.) Net Present Value 18,691 (17,572) (8.632) Common stock Preferred stock Bonds 3 4252976 4 8. 6 5 4 4 3 2 2 1 1 1 1 0 0 0 0 0 0 0 0 0 20000000000000000000 063992699 409915940 875443222 6844 7 842247 876543 11000000 670465 1371621 5433229111 2 198655 222111100000 10000000000000000000 9 6543 840 820 7531 62 58558 3090 9866E 96420 87 54 43 10000000000000000000 379 87 654 43322 21642 1000 9372841 03853 6 5 5 4 4 3 3 2 2 2 1 1 1 2000 018078 050730 2 2 6791 8 1-00000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5333305635114 8273963 10000000000000000000 3 3605 T0000000000000000000 9805 13 127795 628520 44332222 372 6772 864310 9352 5938 655443332222 01 12 31 95 17 308038 875 11 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 039 880 37460 1: 628519631 6655443332222111 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 67 i2 2 8 6 6 9 5 2 1 2 6285297531 44 33322 222 2 90000000000000000000 51030 838 39780520 6296 4 433 3 2222 0000000000000000000 1 0 544433 3 2 3 98877 3 027557287792 40629529641 776655544443333 7 60000000000000000000 5705-86 14 85308 53 16 6 5 5 5 5 4 4 4 4 99887776 50000000000000000000 2595200136 62852 555544 %99888 400000000000000000000 01 123456789 2 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 21.886 1859 1.833 1.808 1.783 1.759 1.736 1.713 1690 1668 1647 1626 1605 1.585 1.566 1.547 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 43.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2743 2.690 2.639 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3199 3.127 3.058 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3706 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 9 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 10 8,.111 7.722 7.360 7024 6.710 6.418 6.145 5.889 5650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 11 8 760 8.306 7.887 7499 7139 6.805 6.495 6.207 5.938 5.687 5453 5.234 5.029 4.836 4.656 4.486 12 9.385 8.863 8.384 7.943 7536 7161 Untitled form - Google Forms 13 9.986 9.394 8.853 8.358 7904 7487 7103 6.7 4 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 15 11.118 10.380 9712 9108 8.559 8.061 7606 7191 6811 6.462 6142 5.847 5.575 5.324 5.092 4.876 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6974 6604 6.265 5.954 5.668 5.405 5162 4.938 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7549 7120 6.729 6.373 6.0475.749 5.475 5.222 4.990 18 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 19 13.134 12.085 11.158 10.336 9604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 60 5.421 5.197 4.988 4.793 4.611 842 5.583 5.342 5.118 4910 4.715Step by Step Solution
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