Question

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?

Answer 1

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