On January 2, 20x1, Jennifer Grey purchased 800 shares of Sounder Telecommunications common stock at $35 per share. The company paid a $1.50 dividend per share on December 28 of that year, and raised the amount by $0.50 per share for a distribution on December 28, 20x2. Jennifer sold her entire investment on December 30, 20x2, generating a $5,000 gain on the sale of stock.

Required:
A. Prepare a dated listing of the cash inflows and outflows related to Jennifer's stock investment. Ignore income taxes.
B. Assume that Jennifer has a 10% hurdle rate for all investments. Rounding to the nearest dollar, compute the net present value of her investment in Sounder and determine whether she achieved her 10% goal.

Question

On January 2, 20x1, Jennifer Grey purchased 800 shares of Sounder Telecommunications common stock at $35 per share. The company paid a $1.50 dividend per share on December 28 of that year, and raised the amount by $0.50 per share for a distribution on December 28, 20x2. Jennifer sold her entire investment on December 30, 20x2, generating a $5,000 gain on the sale of stock.
  
Required:
A. Prepare a dated listing of the cash inflows and outflows related to Jennifer's stock investment. Ignore income taxes.
B. Assume that Jennifer has a 10% hurdle rate for all investments. Rounding to the nearest dollar, compute the net present value of her investment in Sounder and determine whether she achieved her 10% goal.

Quizplus · Accepted Answer

The Answer of On January 2, 20x1, Jennifer Grey purchased 800 shares of Sounder Telecommunications common stock at $35 per share. The company paid a $1.50 dividend per share on December 28 of that year, and raised the amount by $0.50 per share for a distribution on December 28, 20x2. Jennifer sold her entire investment on December 30, 20x2, generating a $5,000 gain on the sale of stock.
  
Required:
A. Prepare a dated listing of the cash inflows and outflows related to Jennifer's stock investment. Ignore income taxes.
B. Assume that Jennifer has a 10% hurdle rate for all investments. Rounding to the nearest dollar, compute the net present value of her investment in Sounder and determine whether she achieved her 10% goal.

On January 2, 20x1, Jennifer Grey Purchased 800 Shares of Sounder