Net Present Value. Assume that your firm wants to choose between two project options:Project A: $500,000 invested today will yield an expected income stream of $150,000 per year for 5 years, starting in Year 1.Project B: an initial investment of $400,000 is expected to produce this revenue stream: Year 1 = 0, Year 2 = $50,000, Year 3 = $200,000, Year 4 = $300,000, and Year 5 = $200,000.Assume that a required rate of return for your company is 10% and that inflation is expected to remain steady at 3% for the life of the project. Which is the better investment? Why? Respond based on filling in the graph within the Excel template.5. Net Present Value • Project A: $500,000 invested today will yield an expected income stream of $150,000 per year for 5 years, starting in Year 1. • Project B: Investment of $400,000 is expected to produce this revenue stream: Year 1 = 0, Year 2 = $50,000, Year 3 = $200,000, Year 4 = $300,000, and Year 5 = $200,000. Assume that a required rate of return for your company is 10% and that inflation is expected to remain steady at 3% for the life of the project. Tips: Project A Discount Factor New Inflows Discount Rate = Rate of Return + Inflation Year Cash Flow Discount factor = 1/(1+r)t 0 (500,000) 1.00 (500,000) r = discount rate and t = year 1 150,000 2 150,000 3 150,000 4 150,000 5 150,000 NPV Total: Project B Discount Factor New Inflows Year Cash Flow 0 (400,000) 1.00 (400,000) 1 - 2 50,000 3 200,000 4 300,000 5 200,000 NPV Total: Which is the better Investment? Why?