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slega [8]
3 years ago
11

Linda Clark received $223,000 from her mother’s estate. She placed the funds into the hands of a broker, who purchased the follo

wing securities on Linda’s behalf:a. Common stock was purchased at a cost of $99,000. The stock paid no dividends, but it was sold for $161,000 at the end of three years.b. Preferred stock was purchased at its par value of $54,000. The stock paid a 6% dividend (based on par value) each year for three years. At the end of three years, the stock was sold for $39,000.c. Bonds were purchased at a cost of $70,000. The bonds paid annual interest of $1,500. After three years, the bonds were sold for $86,000.

Business
2 answers:
Nookie1986 [14]3 years ago
8 0

Answer:

Explanation:

check attached files below for explanation..

olya-2409 [2.1K]3 years ago
4 0

Question:

With a discount rate of 11% solve for the net present value:

Answer:

A) NPV 18,721.81

B) NPV -17.565,93

C) NPV  -3.451,97‬

Explanation:

a) we use the lump sum present value formula and then, compare against the cost.

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $161,000.00

time  3.00

rate  0.11000

\frac{161000}{(1 + 0.11)^{3} } = PV  

PV   117,721.8124

117,721.81 - 99,000 = 18,721.81

b) We solve forthe present value of the annuity of dividends and the lump sum of the sale price.

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $39,000.00

time  3.00

rate  0.11000

\frac{39000}{(1 + 0.11)^{3} } = PV  

PV   28,516.4639

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 3,240.00

time 3

rate 0.11

3240 \times \frac{1-(1+0.11)^{-3} }{0.11} = PV\\

PV $7,917.6357

Net present value

28,516.43 + 7,917.64 - 54,000 = -17.565,93

C) We solve forthe present value of the annuity of dividends and the lump sum of the sale price.

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 1,500.00

time 3

rate 0.11

1500 \times \frac{1-(1+0.11)^{-3} }{0.11} = PV\\

PV $3,665.5721

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $86,000.00

time  3.00

rate  0.11000

\frac{86000}{(1 + 0.11)^{3} } = PV  

PV   62,882.4588

62,882.46 + 3,665.57 - 70,000 = -3.451,97‬

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3 0
2 years ago
National Park Tours Co. is a travel agency. The nine transactions recorded by National Park Tours during May 2019, its first mon
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Answer:

National Park /Tours Co.

National Park Tours Co.

Unadjusted Trial Balance

May 31, 2019

Account Titles                Debit       Credit

Cash                            $10,700

Equipment                   25,000

Drawing                         3,500

Accounts receivable     3,500

Accounts payable                          $ 1,750

Fees Earned                                   13,900

Supplies                       2,450

Capital                                            34,700

Operating expenses   5,200

Totals                      $50,350     $50,350

Explanation:

a) Data and Calculations:

T-accounts

Cash

Account Titles                Debit       Credit

Beth Worley, Capital  (1) 34,700

Supplies                                      (2) 2,450

Equipment                                  (3) 4,500

Operating expense                   (4) 3,800

Accounts payable                    (5) 18,750

Accounts receivable (6) 10,400

Operating expense                   (8) 1,400

Drawings                                  (9) 3,500

Balance                                        10,700

Totals                         $45,100  $45,100

Equipment

Account Titles             Debit       Credit

Cash                         (3) 4,500

Accounts payable (3) 20,500

Balance                                       25, 000

Totals                       $25,000   $25,000

Beth Worley, Drawing

Account Titles           Debit       Credit

Cash                     (9) 3,500

Accounts Receivable

Account Titles           Debit       Credit

Fees Earned     (7) 13,900

Cash                                    (6) 10,400

Balance                                      3,500

Totals                   $13,900    $13,900

Accounts Payable

Account Titles           Debit       Credit

Equipment                             (3) 20,500

Cash                    (5) 18,750

Balance                      1,750

Totals                   $20,500     $20,500

Fees Earned

Account Titles           Debit       Credit

Accounts receivable            (7) 13,900

Supplies

Account Titles           Debit       Credit

Cash                   (2) $2,450

Beth Worley, Capital

Account Titles           Debit       Credit

Cash                                       (1) 34,700

Operating Expenses

Account Titles           Debit       Credit

Cash                     (4) 3,800

Cash                     (8) 1,400

Balance                                       5,200

Totals                    $5,200       $5,200

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Answer:

Alternation ranking method.

Explanation:

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