Suppose Yolanda needs a dog sitter so that she can travel to her sister's wedding. Yolanda values dog sitting for the weekend at
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The applicable formula is as follows:
PV = PMT [1-(1+IRR)^-n]/[IRR]
Where;
PV = Present value = -$200,000 (set as negative as it is a negative cash flow).
PMT = Annual depreciation values = $44,503
IRR = Internal rate of return
n = Period in years = 10 years
Using excel formulas (shown in the attached image);
IRR = 18%
PV = PMT [1-(1+IRR)^-n]/[IRR]
Where;
PV = Present value = -$200,000 (set as negative as it is a negative cash flow).
PMT = Annual depreciation values = $44,503
IRR = Internal rate of return
n = Period in years = 10 years
Using excel formulas (shown in the attached image);
IRR = 18%