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On January 2, Fred Critchfield paid $19,000 for 930 shares of the common stock of Acme Company. Mr. Critchfield received an $0.79 per share dividend on the stock at the end of each year for six years. At the end of six years, he sold the stock for $22,000. Mr. Critchfield has a goal of earning a minimum return of 17% on all of his investments. (Ignore income taxes.) |
| Click here to view Exhibit 11B 1 andExhibit 11B 2, to determine the appropriate discount factor(s) using tables. |
| Required: |
| a. |
Determine the net present value. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answer to the nearest whole dollar.) |
| Net present value | $ |
| b. | Did Mr. Critchfield earn a 17% return on the stock? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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