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On January 2 Fred Critchfield paid $18,000 for 900 shares of the common stock of Acme Company Mr. Critchfield received an $0 80 per share dividend on the stock at the end of each year for four

On January 2, Fred Critchfield paid $18,000 for 900 shares of the common stock of Acme Com- pany. Mr. Critchfield received an $0.80 per share dividend on the stock at the end of each year for four years. At the end of four years, he sold the stock for $22,500. Mr. Critchfield has a goal of earning a minimum return of 12% on all of his investments.

Required:

(Ignore income taxes.) Did Mr. Critchfield earn a 12% return on the stock? Use the net present value method and the general format shown in Exhibit 13–4. Round all computations to the nearest whole dollar.

Jun 27 2020 View more View Less

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