Labeau Products, Ltd., of Perth, Australia, has $24,000 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 |
$24,000 |
$24,000 |
| Annual cash inflows |
$8,000 |
|
| Single cash inflow at the end of 6 years |
$44,000 |
| Life of the project |
6 years |
6 years
|
The company's discount rate is 14%.
Determine the appropriate discount factor(s) using tables.
Required:
a. Determine the net present values. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)