Basic Net Present Value for return on Malti Company stock
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Basic Net Present Value Analysis
Kathy Myers frequently purchases stocks and bond, but she is uncertain how to detemine he rate of return on what she is earning. 3 years ago she paid 13000 for 200 shares of Malti Companies Stock. She received 420$ cash divided on the stock at the end of each year for 3 years. At the end of 3 years she sold the stock for 16000. Kathy would like to earn a return rate of at least 14% on all of her investments. She is not sure whether the Malti Company stock provided a 14% return and would like help with the necessary computations.
Ignore income taxes:
1) Using the net present value method, determine whether or not the Malti Company stock provided a 14% return. Use the general format and round all computations to the nearest whole dollar.
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Solution Summary
Computations and process shown for you.
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See attached file for formulas and better formatting.
Although the return in dollars looks good, the present value of the cash flow stream over the four years is only $10,269.77. I ...
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