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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Comparison of Projects Using Net Present Value

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?

 

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
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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