Question
Labeau Products, Ltd., of Perth, Australia, has $50000 to invest. The company is trying to decide between two alternative uses for the funds as follows:
Labeau Products, Ltd., of Perth, Australia, has $50000 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 $ 50000 $ 50,000 Annual cash inflows $ ,16500 Single cash inflow at the end of 10 years $ 2250000 Life of the project 10 years 10 years The companys discount rate is 20%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y.
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