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Labeau Products Ltd, of Perth, Australia, has $55,000 to invest. The company is trying to decide between two alternative uses for the funds, as
Labeau Products Ltd, of Perth, Australia, has $55,000 to invest. The company is trying to decide between two alternative uses for the funds, as follows: Initial Investment Annual cash Inflows Single cash inflow at the end of 10 years Life of the project Investant Options Project X Project Y $55,000 19,000 $55,000 250,000 10 years 10 years Labeau's discount rate for both projects is 18% (gnore income taxes.) Click here to view Exhibit 10-1 and Exhibit 10.2. to determine the appropriate discount factoris) using tables Required: Determine the net present value: (Negative amounts should be indicated with a minus sign. Round discount factor(s) to 3 decimal places.) Project X Project Y Net Present Value Which alternative would you recommend that the company accept?
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