CFIN
6th Edition
ISBN: 9780357144039
Author: BESLEY
Publisher: CENGAGE L
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Chapter 5, Problem 5PROB
Summary Introduction
The rate of
The number of outstanding shares is 1,000 sold for $45 each. Two years ago, the purchase price per share is $50. The quarterly dividend is $0.50.
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Yesterday Sandi sold 1,000 shares of stock that she owned for $45 per share. When she purchased the stock two years ago, Sandi paid $50 per share. Every three months during the time she held the stock, Sandi received a quarterly dividend equal to $0.50 per share. Eight dividends were received during the two years she held the stock. (a) What return (yield) did Sandi earn during the two years she held the stock? (b) If the price of the stock was $45 per share one year ago, what return did Sandi earn in each year she held the stock?
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This morning Sophia sold 500 shares of Multiface Consulting for $75.60 per share. She purchased the stock for $70 one year ago. During the time she held the stock, Sophia received two dividend payments; one dividend payment was $1.00 per share and the other dividend payment was $1.10 per share. What yield (rate of return) did Sophia earn on her investment for the year she held the Multiface stock?
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- Joel purchased 100 shares of stock for $31 per share. During the year, he received dividend checks amounting to $289. Joel recently sold the stock for $50 per share. What is the dollar amount of Joel's return?arrow_forwardKathy 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 $27,000 for 1,010 shares of Malti Company's common stock. She received a $879 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 $25,000. Kathy would like to earn a return of at least 7% on all of her investments. She is not sure whether the Malti Company stock provide a 7% return and would like some help with the necessary computations. Required: Compute the net present value that Kathy earned on her investment in Malti Company stock. Did the Malti Company stock provide a 7% return?arrow_forwardKathy 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 $23,500 for 1,030 shares of Malti Company's common stock. She received a $917 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 $21,000. Kathy would like to earn a return of at least 8% on all of her investments. She is not sure whether the Malti Company stock provided a 8% return and would like some help with the necessary computations. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value that Kathy earned on her investment in Malti Company stock. 2. Did the Malti Company stock provide a 8% return? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the net present value that Kathy earned on her investment in…arrow_forward
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