Question 1150553
see my worksheet below.


<img src = "http://theo.x10hosting.com/2019/121701.jpg" alt="$$$" >


<img src = "http://theo.x10hosting.com/2019/121702.jpg" alt="$$$" >


the NPV analysis shows:


NPV plan A at 4.9% per year compounded quarterly.				$7,481,893.62 
				
NPV plan B at 4.9% per year compounded quarterly.				$6,878,018.55


that's the present value of all the cash flows at 4.9% annual percentage rate of return compounded quarterly to give you an effective annual percentage of 4.990775%


i believe you want the plan with the highest NPV.
that would be plan A.


i also took a look at the net future value and plan A was higher.


the cash flow results are positive when money is flowing into the account and negative when money is flowing out of the account.


the higher NPV and NFV are for plan A because it retained more money in the account earlier in the study period than plan B.


i could be wrong because i haven't done this in a while and this problem is a little different because usually there is an investment that is an outflow and there are revenue streams that are inflows, while with this problem there is money at hand in the beginning and it is being doled out over time.


what you see is my best guess as to what the solution should be.