Question

Question: calculate NPV of each plan.

Caclulate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A. (Complete all answer boxes. Enter a "0" for any zero balances or amounts that do not apply to the plan. Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) (Click the icon to view Present Value of $1 table.) 3 (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Plan A: Years Net Cash Inflow Annuity PV Factor (i=10%, n=10) PV Factor (i=10%, n=10) Present Value 1 - 10 10 Present value of annuity Present value of residual value Total PV of cash inflows Initial Investment 0 Net present value of Plan A Entor a number in the edit fiold and then click Check Anchor

Answer 1

А 1 Plan A: Years Net Cash Inflow $ 1,525,000 Annuity PV Factor (I =10%, n = 10) 6.145 3 1 to 10 Present Value of Annuity 10 Present Value of Annuity Total PV of Cash inflows o Initial Investment Net Present Value of Plan A PV Factor Present Value (1 =10%, n = 10) $ 9,371,125 0.386 $ $ 9,371,125 $ 8,500,000 S 871,125 9 Plan B: Years Net Cash Annuity PV Factor Inflow (1 =10%, n = 10) $ 1,090,000 6.145 $ 1,200,000 1 to 10 Present Value of Annuity 10 Present Value of Annuity Total PV of Cash inflows 0 Initial Investment Net Present Value of Plan A PV Factor Present Value (1 =10%, n = 10) $ 6,698,050 0.386 $ 463,200 $ 7,161,250 $ 8,150,000 $ -988,750

A D 1 Plan A: Years Present Value Net Cash Inflow 1525000 O Annuity PV Factor (1 PV Factor 1 =10%, n = 10) (1 =10%, n = 10) 6.145 0.386 3 1 to 10 Present Value of Annuity 4 10 Present Value of Annuity 5 Total PV of Cash inflows 60 Initial Investment Net Present Value of Plan A =+C3*D3 =+C4*E4 =+F3+F4 8500000 =+F5-F6 cov 9 Plan B: PV Factor (1 =10%, n = 10) Present Value Annuity PV Factor ( | -10%, n=10) 6.145 Net Cash Inflow 1090000 1200000 Years 10 11 1 to 10 Present Value of Annuity 12 10 Present Value of Annuity 13 Total PV of Cash inflows 14 0 Initial Investment 15 Net Present Value of Plan A 0.386 =+C11*011 =+C12*E12 =+F11+F12 8150000 =+F13-F14