Kathy 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 $20,000 for 940 shares of Malti Company’s common stock. She received a $752 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 $23,000. Kathy would like to earn a return of at least 13% on all of her investments. She is not sure whether the Multi Company stock provide a 13% return and would like some help with the necessary computations. Required:
a. Compute the net present value that Kathy earned on her investment in Malti Company stock.
b. Did the Malti Company stock provide a 13% return?