Anita Vasquez received $160,000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the following securities on Anita's behalf:
a.Common stock was purchased at a cost of $80,000. The stock paid no dividends, but it was sold for $180,000 at the end of four years.
b.Preferred stock was purchased at its par value of $21,000. The stock paid a 10% dividend each year for four years. At the end of four years, the stock was sold for $15,000.
c.Bonds were purchased at a cost of $59,000. The bonds paid $3,540 in interest every six months. After four years, the bonds were sold for $69,000.
The securities were all sold at the end of four years so that Anita would have funds available to start a new business venture. The broker stated that the investments had earned more than a 22% return, and he gave Anita the following computation to support his statement.