On 2nd january fred critchfield paid 10500 for 1000 shares

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Reference no: EM13352142

On 2^nd January, Fred Critchfield paid $10,500 for 1,000 shares of the common stock of Acme Company. Mr. Critchfield received a $0.86 per share dividend on the stock at the end of every year for 7 years. At the end of seven years, he sold the stock for $24,000. Mr. Critchfield has a goal of earning a minimum return of 13 percent on all of his investments.

Determine the suitable discount factor(s) using tables.

Required:

a. Evaluate the net present value. (Negative amount should be shown by a minus sign. Round discount factor(s) to 3 decimal places, other intermediate evaluations and final answer to the nearest whole dollar.)

Net present value $

b. Did Mr. Critchfield earn a 13 percent return on the stock?

Reference no: EM13352142

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