Calculate the net present value of both projects

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Question - Mobil Company has hired a consultant to propose a way to increase the company's revenues. The consultant has evaluated two mutually exclusive projects with the following information provided for each project:

Unit = $

Project Turtle

Project Snake

Capital investment

1,105,000

625,000

Annual cash flows

180,000

105,000

Estimated useful life (years)

10

10

Mobil Company uses a discount rate of 9% to evaluate both projects.

Required -

(a) Calculate the net present value of both projects.

(b) Calculate the profitability index for each project.

(c) Which project should Mobil accept?

Reference no: EM133057566

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