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securities on Linda's behalt Linda Clark received $221.000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the

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securities on Linda's behalt Linda Clark received $221.000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the following a. Common stock was purchased at a cost of $110,000. The stock paid no dividends, but it was sold for $190,000 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 years. At the end of three years, the stock was sold for $28,000 c 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 Common stock Gain on sale (5190,eee - $110, eee) Preferred stock! Dividends paid (4% x $42,080 x 3 years) Loss on sale ($28,eee - 542,eee) Bonds: Interest paid ($3,eee 3 years) Gain on sale (574, eee - 569,088) Net gin on all investments 5,040 (14,000) 9, eee 5,000 $ 85,e4e 585,048 + 3 years = 12.80 x $221, eee Click here to view Exhibit 148-1 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-b. On which investment(s) did Linda earn a 12% rote of return? 2 Considering all three investments together did Linda earn a 12% rate of return? 3. Lindo 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 inflow must the store generate for Linda to earn a 9% return over the 12-year period

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