Explain these two solutions.

4. Explain the two charts below: With the terminal value calculated, it can be added back into the main NPV equation to solve for the ten-year present value: CF CF2 CF3 CF. + PVYears 5-10) NPV=CF + + + (1 +k)!" (1+k)2 (1+k)3 (1 +k)4 $2,000,000 $5,000,000 $10,00.000 NPVExpansion - $15,000,000+ + + (1 +0.08) (1 +0.08) (1 +0.08)3 $25,00,000+ $115,571,991 + (1 +0.08) $4,000,000 (1 +0.08) NPVExpansion = $102,399,478 for ten-year time frame $4,000,000 $4,000,000 NPV Revision =-$7,000,000+ (1 +0.08) (1 + 0.08) $4,000,000+ $18,491,518 + (1 + 0.08) NPV Revision = $19,840,325 for ten-year time frame Substituting the terminal values as before: $2,000,000 NPVExpansion =-$15,000,000 + $5,000,000 $10,00,000 + (1 +0.08) (1+0.08)2 *(1 +0.08)3 $25,00,000+ $312,500,000 + (1 +0.08) NPVExpansion = $247,147,443 maximum time frame $4,000,000 $4,000,000 NPV Revision = -$7,000,000+ + (1 +0.08) (1 +0.08) $4,000,000 $4,000,000+ $50,000,000 + + (1 +0.08) (1 +0.08) NPV Revision = $43,000,000 maximum time frame