Big Spenders Inc

Big Spenders Inc. has been working on diversifying its portfolio of investments and requires accounting advice for a decision between two car cleaning and detailing companies. Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment Cleaning $3,000 and Detailing $3,200.

Compute the present value of the cash inflows for each investment using an 8% discount rate for Cleaning and 10% for Detailing.

Year	Cleaning	Detailing	Discount Factor 8%	Discount Factor 10%
1	$500	2,000	0.9259	0.9091
2	1,000	1,500	0.8573	0.8264
3	1,500	1,000	0.7938	0.7513
4	2,000	5,00	0.7350	0.6830
Total	$5,000	$5,000	0.6806	0.6209

First you have to explain what Net present value and payback are to your clients and what their differences are. Also, you need to give your recommendation of which project they should move forward with based on your quantitative analysis.