Donald Hughes 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,Hughes 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 muchis Hughesrequired to invest in this project
b. Whatis the intermal rate of return on Hughes's project?

Question

Donald Hughes 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,Hughes 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 muchis Hughesrequired to invest in this project
b. Whatis the intermal rate of return on Hughes's project?

Quizplus · Accepted Answer

The Answer of Donald Hughes 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,Hughes 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 muchis Hughesrequired to invest in this project
b. Whatis the intermal rate of return on Hughes's project?

Donald Hughes Has an Opportunity to Invest in a Project