Labeau Products Ltd., of Perth, Australia, has $122,500 to invest. The company is trying to decide between two alternative uses for the funds. The alternatives follow:

The company?s discount rate is 6%.

Required:

Which alternative would you recommend that the company accept? Show all computations using the NPV approach. Prepare a separate computation for each project.

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Invest in Project X Invest in Project Y $122,500 Investment required $122,500 Annual cash inflows 31,500 Single cash inflow at the end of 10 years 525,000 Life of the project 10 years 10 years