Following is a table for the present value of $1 at compound interest: Year 6%   10%   12% 1 0.943       0.909       0.893     2 0.890       0.826       0.797     3 0.840       0.751       0.712     4 0.792       0.683       0.636     5 0.747       0.621       0.567     Following is a table for the present value of an annuity of $1 at compound interest: Year 6%   10%   12% 1 0.943       0.909       0.893     2 1.833       1.736       1.690     3 2.673       2.487       2.402     4 3.465       3.170       3.037     5 4.212       3.791       3.605     Using the tables provided, the internal rate of return of an investment of $210,600 that would generate an annual cash inflow of $50,000 for the next 5 years is a.12% b.14% c.6% d.10%

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.