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Calculate the net present value of both projects

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Reference no: EM133185050

Question - SBM 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:

 

Project A

Project B

Capital investment

$790,000

$440,000

Annual cash flows

130,000

75,000

Estimated useful life

10 years

10 years

SBM Companyuses a discount rate of 9% to evaluate both projects.

Required -

1. Calculate the net present value (NPV) of both projects.

2. Calculate the present value index for each project.

3. Which project should Mobil accept?

Reference no: EM133185050

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