An investment is expected to provide cash inflows of 100000

An investment is expected to provide cash inflows of $100,000 at the end of each of the next six years. What is the market value of the investment using a discount rate of 12%, rounded to the nearest dollar?

Answer=$411,140.73( considering discount rate of 12% as IRR on which NPV will be zero with this investment)

Here the question is asking about the NPV (Net Present Vaue) of the investment .

Sof if we consider this discount rate as IRR then the NPV comes without considering the investment value , will be treated as market value of investment on which NPV will be zero

PV = {Net Period Cash Flow/(1+R)^T} - Initial Investment

where R is the rate of return and T is the number of time periods.

Cash Flow Stream Detail
Period	Cash Flow	Present Value
0	0.00	0.00
1	100,000.00	89,285.71
2	100,000.00	79,719.39
3	100,000.00	71,178.02
4	100,000.00	63,551.81
5	100,000.00	56,742.69
6	100,000.00	50,663.11
	Total:	411,140.73

An investment is expected to provide cash inflows of 100000

Solution

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