Labeau Products, Limited, of Perth, Australia, has $21,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Investment required. Annual cash inflows Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept? Invest in Project X Single cash inflow at the end of 6 years Life of the project The company's discount rate is 18%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required 1 Required 2 Required 3 $ 21,000 $ 8,000 Complete this question by entering your answers in the tabs below. Met prenent value 6 years Invest in Project Y $ 21,000 $ 50,000 6 years Compute the net present value of Project X. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.)

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section: Chapter Questions
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Labeau Products, Limited, of Perth, Australia, has $21,000 to invest. The company is trying to decide between two alternative uses for
the funds as follows:
Required:
1. Compute the net present value of Project X.
2. Compute the net present value of Project Y.
3. Which project would you recommend the company accept?
Invest in
Project X
Investment required
Annual cash inflows
Single cash inflow at the end of 6 years
Life of the project
The company's discount rate is 18%.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required 1 Required 2 Required 3
$ 21,000
$ 8,000
6 years
Complete this question by entering your answers in the tabs below.
Invest in
Project Y
$ 21,000
$ 50,000
6 years
Compute the net present value of Project X. (Negative amounts should be indicated by a minus sign. Round your final answer
to the nearest whole dollar amount.)
Net present value
Transcribed Image Text:Labeau Products, Limited, of Perth, Australia, has $21,000 to invest. The company is trying to decide between two alternative uses for the funds as follows: Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project would you recommend the company accept? Invest in Project X Investment required Annual cash inflows Single cash inflow at the end of 6 years Life of the project The company's discount rate is 18%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required 1 Required 2 Required 3 $ 21,000 $ 8,000 6 years Complete this question by entering your answers in the tabs below. Invest in Project Y $ 21,000 $ 50,000 6 years Compute the net present value of Project X. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value
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