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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:

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%.

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.

Required:

3. Which project would you recommend the company accept?

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