Question
1 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
1 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:
Project Turtle Project Snake
Capital investment $1,105,000 $625,000
Annual cash flows 180,000 105,000
Estimated useful life 10 years 10 years
Mobil Company uses a discount rate of 9% to evaluate both projects.
2 Calculate the net present value of both projects. (Use the above table.)(Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)
3. Calculate the profitability index for each project.(Round answers to 2 decimal places, e.g. 15.25.)3
4 Which project should Mobil accept?
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