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Please help Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For
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Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $24,500 for 1,020 shares of Malti Company's common stock. She received a $898 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $20,000. Kathy would like to earn a return of at least 8% on all other investments. She is not sure whether the Malti Company stock provided a 8% return and would like some help with the necessary computations. (Ignore income taxes.) Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factors) using tables Required: a. Determine the net present value. (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s) and round your Present Value final answers to the nearest whole dollar.) Now Purchase of stock Annual cash dividend Sale of stock Total cash flows Discount factor Present value Net present value 0 $ 0 $ 0 $
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