Invest in Invest in Project X Project Y Investment required .. Annual cash Inflows Single cash inflow at the end of 6 years $35,000 $35,000 Life of the project ... 6 years $90,000 6 years
Invest in Invest in Project X Project Y Investment required .. Annual cash Inflows Single cash inflow at the end of 6 years $35,000 $35,000 Life of the project ... 6 years $90,000 6 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Comparison of Projects Using
Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between two alternative uses for the funds as follows:
The company’s discount rate is 18%.
Required:
1. Compute the net present value of Project X.
2. Compute the net present value of Project Y.
3. Which project would you recommend the company accept?

Transcribed Image Text:Invest in
Invest in
Project X Project Y
Investment required ..
Annual cash Inflows
Single cash inflow at the end of 6 years
$35,000 $35,000
Life of the project ...
6 years
$90,000
6 years
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