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Capital Budgeting and Prospective Cash Inflows

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The following table shows two schedules of prospective operating cash inflows, each of which requires the same net initial investment of $10,000 now:

Annual Cash Inflows

Year_________Plan A________Plan B







The required rate of return is 6% annually. All cash inflows occur at the end of each year. In terms of net present value, which plan is more desirable? Show your computations.

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