Using the present value index Two alternative investment opportunities are available to Kevin Hand, president of Hand Enterprises.

For the first alternative, the present value of cash inflows is $133,000, and the present value of cash outflows is $127,000. For the second alternative, the present value of cash inflows is $230,000, and the present value of cash outflows is $223,000.

Required

a. Calculate the net present value of each investment opportunity.

b. Calculate the present value index for each investment opportunity.

c. Indicate which investment will produce the higher rate of return.