Showingnbsp all computations using the net present value

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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: EM13355964

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