Cash Flow of an investment A Cash Flow of an investment B ...

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Accounting

Cash Flow of an investment A

Cash Flow of an investment B

0

($150,000)

($120,000)

1

$50,000

$45,000

2

$60,000

$55,000

3

$70,000

$65,000

4

$30,000

$45,000

5

($10,000)

($120,000)

6

$80,000

$150,000

7

$120,000

$180,000

8

($20,000)

($50,000)

9

$90,000

$80,000

10

$130,000

$100,000

You have two investment plans indicated be the provided table. I would like you to provide a complete comparative evaluation of these investment plans. Calculate the present values of these cash flows using the mathematical formula for the present value for a discount rare you provide, and verify them with the EXCEL PV formula. Calculate the Net Present Value of these projects with all possible ways you know. Evaluate their Internal rate of return. Provide a graph that indicates their Net Present Value for discount rates from zero to 50%. Explain why the NPV changes as the discount rate changes. Find which project you may prefer at what rate. Furthermore, I would like to evaluate the projects not only at the beginning of the time period (0) but at the end of the last period (the end of the 10th year) using again the FV Excel and mathematical formulas.

In the process, I would like you to explain the formulas and how you used them in your work for the comparison of these two projects.

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