A company has two potential projects to choose from. Project A requires an initial investment of $400,000 and will generate $130,000 annually for 5 years. Project B requires a $400,000 initial investment and will generate $70,000 in the first year, with cash flows increasing by $10,000 each subsequent year. The discount rate is 10%.

Task: Calculate the NPV for both projects and advise which project the company should choose.

The solution that teacher have provided is

For Project B: NPV = -Initial Investment + (Cash Flowt / (1 + r)^t) NPV = -$400,000 + ($70,000 / 1.10) + ($80,000 / 1.10^2) + ($90,000 / 1.10^3) + ($100,000 / 1.10^4) + ($110,000 / 1.10^5) NPV = -$400,000 + $63,636 + $66,116 + $67,314 + $68,301 + $68,151 NPV = $33,518

BUT MY CALCULATION IS 70,000/1.10=63,636

80000/1.10^2=66,116

90,000/1.10^3-67,618

100,000/1.10^4=68,301

110,000/1.10^5=68301

PLEASE TELL ME WHERE I AM DOING WRONG