On January 2, 19X1, Bruce Greene invested $10,000 in the stock market and purcha

Question

On January 2, 19X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 19X1 and 19X2; the dividend was raised to $3.10 per share in 19X3. On December 31, 19X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments. a.Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to the 19X3 dividend. b.Compute the investment's net present value, rounding calculations to the nearest dollar. c.Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain

Explanation / Answer

19X1: $1300 cash received 19X2: $1300 cash received 19X3: $1550 cash received December 31, 19X3: $13000 cash received for 16% returns for 3 years interest = 4800$ realized value= 7150$ yeah he should have acquired

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