Adam Ball has an opportunity to invest in a project that will yield four annual payments of $12,000
with no salvage. The first payment will be received in exactly one year. On low-risk projects of this
type, Ball requires a return of 6 percent. Based on this requirement, the project generates a
profitability index of 1.03953.
Present value tables or a financial calculator are required.
a. How much is Adam required to invest in this project?
b. What is the internal rate of return on Adam’s project?
CLICK HERE FOR THE SOLUTION
