Labeau Products, Ltd., of Perth, Australia, has $20,000 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	$	20,000	$	20,000
Annual cash inflows	$	6,000
Single cash inflow at the end of 6 years			$	40,000
Life of the project	6 years		6 years

The companys discount rate is 16%.

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: Annual Cash Inflows: Total Cash Flows: Discount Factor (16%): Present Value: Net Present Value:

Project Y: Annual Cash Inflows: Total Cash Flows: Discount Factor (16%): Present Value: Net Present Value:

b.

Which alternative would you recommend that the company accept?

	Project X
	Project Y