Problem:
An Investment analyst wants to know if the investments during the past four years have earned at least a 12% return.
Four years ago she had the following investments
A) She purchased a small building for $50,000 and rented space in it.
She received rental income of $8,000 for each of the four years.
The building was sold this year for $55,000
B) She purchased a small refreshment stand near the city park for $25,000
Annual income from the stand was $5,000 for each of the four years
She sold the stand for $20,000 this year.
C) She purchased an antique car for $5,000 four years ago
She sold it this year to a collector for $7,000
REQUIRED:
1) Using the net present value method, determine whether or not each investment earned at lest 12%
2) Did the investments as a whole earn as least 12% Explain.