Brooks Clinic is considering investing in new heart$-$monitoring equipment. It has two options. Option A would have an initial lower

cost but would require a significant expenditure for rebuilding after $4$ years. Option B would require no rebuilding expenditure, but its

maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the

end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is $8\%.$

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$($a$)$

Compute the $(1)$ net present value, $(2)$ profitability index, and $(3)$ internal rate of return for each option. $($Hint: To solve for internal

rate of return, experiment with alternative discount rates to arrive at a net present value of zero.$)($If the net present value is

negative, use either a negative sign preceding the number eg $-45$ or parentheses eg $(45).$ Round answers for present value and IRR to $0$

decimal places, e$.$g$.125$ and round profitability index to $2$ decimal places, e$.$g$.12\mathrm{.}50.$ For calculation purposes, use $5$ decimal places as

displayed in the factor table provided.$)$

Net Present Value

Option A $

Option B $

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Profitability Index Internal Rate of Return

$\%$

$\%$