Labeau Products, Ltd., of Perth, Australia, has $14,000 to invest. The company is trying to decide between two alternative uses for the funds as follows:

	Invest in Project X		Invest in Project Y
Investment required	$	14,000	$	14,000
Annual cash inflows	$	5,000
Single cash inflow at the end of 6 years			$	35,000
Life of the project	6 years		6 years

The companys discount rate is 18%.

Required:

a.

Determine the net present values. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)

	Now	1	2	3	4	5	6
Project X:
Initial Investment	?	?	?	?	?	?	?
Annual Cash Inflows	?	?	?	?	?	?	?
Total Cash Flows
Discount Factor (18%)	?	?	?	?	?	?	?
Present Value
Net Present Value
Project Y:
Initial Investment	?	?	?	?	?	?	?
Single Cash Inflows	?	?	?	?	?	?	?
Total Cash Flows
Discount Factor (18%)
Present Value
Net Present Value

b.

Which alternative would you recommend that the company accept?

	Project X
	Project Y