Jenna Smith recently purchased an annuity contract that will pay her $125,000 per year for the next 7 years According to Smith 's calculations, the estimated internal rate of return on this investment is 14 percent If Smith 's cost of capital is 10 percent, what is the estimated NPV of the annuity ...

Investment cost 125000 discount ...

Jenna Smith recently purchased an annuity contract that will pay her $125,000 per year for the next

Question:

Jenna Smith recently purchased an contract that will pay her $125,000 per year for the next 7 years. According to Smith's calculations, the estimated on this investment is 14 percent. If Smith's is 10 percent, what is the estimated NPV of the investment?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...