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Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option Awould have an initial lower cost but would require a significant

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Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option Awould 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 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 6% Option A Option B Initial cost $181,000 $283.000 Annual cash inflows $73,000 $82400 Annual cash outflows $30,200 $25.100 Cost to rebuild (end of year 4) $48,000 SO Salvage value SO $8,300 Estimated useful life 7 years 7 years Click here to view PV table (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 atent present value of the net present value is negative, use either a negative sin preceding the number is 45 or parentheses es 1451. Round answers for present value and IRR to decimal places es 125 and round profitability index to 2 decimal places... 1250. For calculation purposes use 5 decimal places as displayed in the factor table provided Net Present Value Prontability Index Intemal Rate of Return Option A 5 Option B

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