Managerial Accounting: E12-6 Labeau Products, Ltd., of Perth, Australia

Managerial Accounting 
E12-6 
Labeau Products, Ltd., of Perth, Australia, has $35,000 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 35,000 35,000 
Annual cash inflows 12,000 
Single cash inflow at the end of 6 years 90,000 
Life of the project 6 years 6 years 

The company’s discount rate is 18%. 

Required: 
a. Determine the net present values. (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s).) 
b. Which investment would you recommend that the company accept?
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