Present Value of an Annuity Calculation

Mark is considering investing in a project that promises to pay him an annual cash flow of $5,000 at the end of each year for the next 10 years. He requires a rate of return of 6% on his investment. To determine the present value of this annuity, Mark needs to use the present value formula for annuities. The formula for calculating the present value of an annuity is:

$$PV = C imes rac{1 - (1 + r)^{-n}}{r}$$

where:

• PV = Present Value
• C = Cash flow per period
• r = Discount rate
• n = Number of periods

Using the information provided, what is the present value of Mark's investment?