Grouper Company has hired a consultant to propose a way to increase the companys revenues. The consultant has evaluated two mutually exclusive projects with the following information provided for each:

		Project Turtle			Project Snake
Capital investment		$1,140,000			$660,000
Annual cash flows		187,000			112,000
Estimated useful life		10 years			10 years

Grouper Company uses a discount rate of 9% to evaluate both projects. Click here to view PV tables.

(a)

• Your Answer
• Correct Answer

Partially correct answer icon

Your answer is partially correct.

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.)

		Project Turtle		Project Snake
Net present value		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

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Solution

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(b)

Calculate the profitability index for each project. (Round answers to 2 decimal places, e.g. 15.25.)

		Project Turtle		Project Snake
Profitability index		enter the profitability index rounded to 2 decimal places		enter the profitability index rounded to 2 decimal places