Determine the net present values.

Labeau Products, Ltd., of Perth, Australia, has $23,000 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 $ 23,000 $ 23,000
  Annual cash inflows $ 7,000
  Single cash inflow at the end of 6 years $ 43,000
  Life of the project 6 years 6 years

 

The company’s discount rate is 16%.

 

 

Required:
a. Determine the net present values.

 

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