Show the net present value approach

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Reference no: EM1311547

Showing all computations using the net present value approach.

Serv U Best, a company that supplies temporary workers for restaurants and other service industries, has $35,000 to invest. Management 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 infows	$9,000
Single cash inflow at the ed of 10 years		$150,000
Life of the project	10 years	10 years

The company's discount rate is 18%.

Required:

Which alternative would you recommend that the company accept? Show all computations using the net present value approach. Prepare separate computations for each project.

Reference no: EM1311547

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