Net Present Value Calculations. Freefall, Inc., has two independent investment opportunities, each requiring an initial investment of $65,000. The companys required rate of return is 8 percent, compounded annually. The cash inflows for each investment are provided as follows.

Investment Y Investment Z

YEAR 1 $ 35,000 $ 5,000

YEAR 2 25,000 15,000 YEAR 3 15,000 25,000 YEAR 4 5,000 35,000 Total cash inflows $ 80,000 $ 80,000

Required:

1. Without resorting to calculations, which investment will have the highest net present value? Explain.

2. Calculate the net present value for each investment (remember to include the initial investment cash outflow in your calculation). Should the company invest in either investment? Round to the nearest dollar.