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Q1) Serv U Best, a company which supplies temporary workers for restaurants and other service industries, has $35,000 to invest. Management is trying to decide between two alternative uses for 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

Company's discount rate is 18%.

problem:

Which alternative would you suggest that company accept? Illustrate all calculation using net present value approach. Create separate calculations for each project.

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  • Reference No.:- M918792

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