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 companys discount rate is 18 Required (Ignore income taxes ) Which alternative would you recommend that the company accept Show all computation...

Item Years Amount of Cash Flows 18 Factor Present Value of Cash Flows Project X Init ...

Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between

Question:

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:

Invest in Invest in Project X Project Y Investment required Annual cash inflows Single cash inflow at the end of 10 year

The company’s discount rate is 18%.

Required:

(Ignore income taxes.) Which alternative would you recommend that the company accept? Show all computations using the net present value approach. Prepare separate computations for each project.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...