M2Feegistr lomework Exercise 13-10 Net Present Value Analysis [LO13-2] Kathy Mye
ID: 2589883 • Letter: M
Question
M2Feegistr lomework Exercise 13-10 Net Present Value Analysis [LO13-2] 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 $33,000 for 880 shares of Malti Company's common stock. She the stock at the end of each year for three years. At the end of three years, she sold the stock return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provided a 7% return and would ike some help with the necessary computations received a $818 cash dividend on for $32,000. Kathy would like to earn a Click here to view Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factorts) using tables Required: 1. Compute the net present value that Kathy earned on her investment in Maliti Company stock Did the Malti Company stock provide a 7% return? Complete this question by entering your answers in the tabs below Reqared 1Required 2 Compute the net present value that Kathy earned on her investment in Malti Company stock. (Negative amounts should be ndicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Required 2Explanation / Answer
1. Cash flow PV Factor 7% Present value
year 0 -33000 1 -33000
Year 1 818 0.9345 764.49
year 2 818 0.873 714.47
year 3 32818 0.816 26789.26
NPV -4731.78
2. No did not give a return of 7% as NPV is coming negative
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