Below are two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $18,000 now: Plan A Plan B Year 1 $2,000 $3,000 Year 2 3,000 5,000 Year 3 4,000 9,000 Year 4 7,000 5,000 Year 5 9,000 3,000 Total $25,000 $25,000 The required rate of return is 6% compounded annually. All cash inflows are at the end of each year. In terms of net present value, which plan is more desirable? Show computations.
Below are two schedules of prospective operating
Year 1 $2,000 $3,000
Year 2 3,000 5,000
Year 3 4,000 9,000
Year 4 7,000 5,000
Year 5 9,000 3,000
Total $25,000 $25,000
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