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2 April, 06:03

Cbs company invested in a project that is expected to have an annual cash flow of $10,000. the project's life is five years and has an irr of 14 percent. how much was the initial investment in the project?

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  1. 2 April, 08:10
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    Use the formula of the present value of an annuity ordinary which is

    Pv=pmt [ (1 - (1+r) ^ (-n)) : r]

    Pv initial investment?

    PMT annual cash flow 10000

    R interest rate 0.14

    N time 5years

    Pv=10,000 * ((1 - (1+0.14) ^ (-5)) : (0.14))

    pv=34,330.81
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