this is a excel homework,how to do this in excel? The following table shows two

Question

this is a excel homework,how to do this in excel?

The following table shows two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $10,000 now. The required rate of return is 8% compounded annually. All cash flows occur at the end of each year. In terms of net present value, which plan is more desirable? Use cell references and the PV function to answer this question.                                                            

Ans.                                                       Annual Cash Flow           

Year       Plan A   Plan B

1              $3,000 1000

2              $5,000 2000

  3              2,000     3000

  4              3000       4000

  5              2000       5000

                  Total      15000    15000

Explanation / Answer

Use function "=NPV(8%,-10000,3000,5000,2000,3000,2000)" to get value for plan A. Similarily do for plan B.

Year Plan A Plan B 0 -$10,000.00 -$10,000.00 1 $3,000.00 $1,000.00 2 $5,000.00 $2,000.00 3 $2,000.00 $3,000.00 4 $3,000.00 $4,000.00 5 $2,000.00 $5,000.00 NPV $12,218.39 $11,365.14

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