Labeau Products, Ltd., of Perth, Australia, has $32,000 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	$	32,000	$	32,000
Annual cash inflows	$	9,000
Single cash inflow at the end of 6 years			$	60,000
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:
Initial investment
Annual cash inflows
Total cash flows	$0	$0	$0	$0	$0	$0	$0
Discount factor (16%)
Present value	$0	$0	$0	$0	$0	$0	$0
Net present value	$0
Project Y:
Initial investment
Single cash inflows
Total cash flows	$0	$0	$0	$0	$0	$0	$0
Discount factor (16%)
Present value	$0	$0	$0	$0	$0	$0	$0
Net present value	$0

b.

Which alternative would you recommend that the company accept?

	Project X
	Project Y