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 5%. Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life Option A Option B $194,000 $291,000 $72,600 $82,000 $28,100 $25,100 $51,200 $0 $0 $9,000 7 years 7 years Click here to view the factor table. (a) Your answer is partially correct. 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 O decimal places, e.g. 125 and round profitability index to 2 decimal places, e.g. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal Rate of Return Net Present Value 21371.00 Profitability Index 1.11 Option A $ Option B $ 44641.00 1.15 TABLE 1 Future Value of 1 Periods 2 bova u 4% 1.00000 1.04000 1.08160 1.12486 1.16986 1.21665 1.26532 1.31593 1.36857 1.42331 1.48024 1.53945 1.60103 1.66507 1.73168 1.80094 1.87298 1.94790 2.02582 2.10685 .19112 5% 1.00000 1.05000 1.10250 1.15763 1.21551 1.27628 1.34010 1.40710 1.47746 1.55133 1.62889 1.71034 1.79586 1.88565 1.97993 2.07893 2.18287 2.29202 2.40662 2.52695 2.65330 6% 7% 8% 1.00000 1.00000 1.00000 1.06000 1.07000 1.08000 1.12360 1.14490 1.16640 1.191021.22504 1.25971 1.26248 1.31080 1.36049 1.33823 1.40255 1.46933 1.41852 1.50073 1.58687 1.50363 1.60578 1.71382 1.59385 1.718191.85093 1.68948 1.83846 1.99900 1.79085 1.96715 2.15892 1.89830 2.10485 2.33164 2.01220 2.25219 2.51817 2.13293 2.40985 2.71962 2.26090 2.57853 2.93719 2.39656 2.75903 3.17217 2.54035 2.95216 3.42594 2.69277 3.15882 3.70002 2.85434 3.37993 3.99602 3.02560 3.61653 4.31570 3.20714 3.86968 4.66096 9% 1.00000 1.09000 1.18810 1.29503 1.41158 1.53862 1.67710 1.82804 1.99256 2.17189 2.36736 2.58043 2.81267 3.06581 3.34173 3.64248 3.97031 4.32763 4.71712 5.14166 5.60441 10% 1.00000 1.10000 1.21000 1.33100 1.46410 1.61051 1.77156 1.94872 2.14359 2.35795 2.59374 2.85312 3.13843 3.45227 3.79750 4.17725 4.59497 5.05447 5.55992 6.11591 6.72750 11% 12% 15% 1.00000 1.00000 1.00000 1.11000 1.12000 1.15000 1.23210 1.25440 1.32250 1.36763 1.40493 1.52088 1.51807 1.57352 1.74901 1.68506 1.76234 2.01136 1.87041 1.97382 2.31306 2.07616 2.21068 2.66002 2.30454 2.47596 3.05902 2.55803 2.77308 3.51788 2.83942 3.10585 4.04556 3.15176 3.47855 4.65239 3.49845 3.89598 5.35025 3.88328 4.363496.15279 4.31044 4.88711 7.07571 4.784595.47357 8.13706 5.31089 6.13039 9.35762 5.895096.86604 10.76126 6.54355 7.68997 12.37545 7.26334 8.61276 14.23177 8.06231 9.64629 16.36654 14 17 18 20 2 TABLE 2 Future Value of an Annuity of 1 (n) Payments 8% 11% 1270 4% 5% 6% 7% 9% 10% 12% 15% 1.00000 1.00000 1.00000 1.0000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2.04000 2.05000 2.06000 2.0700 2.08000 2.09000 2.10000 2.11000 2.12000 2.15000 3.12160 3.15250 3.18360 3.2149 3.24640 3.27810 3.31000 3.34210 3.37440 3.47250 4.24646 4.31013 4.37462 4.4399 4.50611 4.57313 4.64100 4.70973 4.77933 4.99338 5.41632 5.52563 5.63709 5.7507 5.86660 5.98471 6.10510 6.22780 6.35285 6.74238 6.63298 6.80191 6.97532 7.1533 7.33592 7.52334 7.71561 7.91286 8.11519 8.75374 7.89829 8.14201 8.39384 8.65408.92280 9.20044 9.48717 9.78327 10.08901 11.06680 9.21423 9.54911 9.89747 10.2598 10.63663 11.02847 11.43589 11.85943 12.29969 13.72682 10.58280 11.02656 11.49132 11.9780 12.48756 13.02104 13.57948 14.16397 14.77566 16.78584 12.00611 12.57789 13.18079 13.8164 14.48656 15.19293 15.93743 16.72201 17.54874 20.30372 13.48635 14.20679 14.97164 15.7836 16.64549 17.56029 18.53117 19.56143 20.65458 24.34928 15.02581 15.91713 16.86994 17.8885 18.97713 20.14072 21.38428 22.71319 24.13313 29.00167 16.62684 17.71298 18.88214 20.1406 21.49530 22.95339 24.52271 26.21164 28.02911 34.35192 18.29191 19.59863 21.01507 22.5505 24.21492 26.01919 27.97498 30.09492 32.39260 40.50471 20.02359 21.57856 23.27597 25.1290 27.15211 29.36092 31.77248 34.40536 37.27972 47.58041 21.82453 23.65749 25.67253 27.8881 30.32428 33.00340 35.94973 39.18995 42.75328 55.71747 23.69751 25.84037 28.21288 30.8402 33.75023 36.97351 40.54470 44.50084 48.88367 65.07509 25.64541 28.13238 30.90565 33.9990 37.45024 41.30134 45.59917 50.39593 55.74972 75.83636 27.67123 30.53900 33.75999 37.3790 41.44626 46.01846 51.15909 56.93949 63.43968 88.21181 29.77808 33.06595 36.78559 40.9955 45.76196 51.16012 57.27500 64.20283 72.05244 102.44358 19 20 TABLE 3 Present Value of 1 (n) Periods 4% 7% 10% 11% 12% .96154 .92456 .88900 .85480 .82193 .79031 .75992 .73069 .70259 .67556 .64958 .62460 .60057 .57748 .55526 .53391 .51337 .49363 .47464 .45639 5% .95238 90703 .86384 .82270 .78353 .74622 .71068 .67684 .64461 .61391 .58468 .55684 .53032 .50507 .48102 .45811 .43630 41552 .39573 3 7689 6% .94340 .89000 .83962 .79209 .74726 .70496 .66506 .62741 .59190 .55839 .52679 .49697 .46884 .44230 .41727 .39365 .37136 .35034 .33051 31180 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 0.47509 0.44401 0.41496 0.38782 0.36245 0.33873 0.31657 0.29586 0.27615 0.25842 8% .92593 .85734 .79383 .73503 .68058 .63017 .58349 .54027 .50025 .46319 .42888 .39711 .36770 .34046 .31524 .29189 .27027 .25025 .23171 .21455 9% .91743 .84168 .77218 .70843 .64993 .59627 .54703 .50187 .46043 42241 .38753 .35554 .32618 .29925 .27454 .25187 .23107 .21199 .19449 .17843 .90909 .82645 .75132 .68301 .62092 .56447 .51316 .46651 .42410 .38554 .35049 .31863 .28966 .26333 .23939 .21763 .19785 .17986 .16351 .14864 .90090 .81162 .73119 .65873 .59345 .53464 .48166 .43393 .39092 .35218 .31728 .28584 .25751 .23199 .20900 .18829 .16963 .15282 .13768 12403 .89286 .79719 .71178 .63552 .56743 .50663 .45235 .40388 .36061 .32197 .28748 .25668 .22917 .20462 .18270 .16312 .14564 .13004 .11611 10367 15% .86957 .75614 .65752 .57175 .49718 .43233 .37594 .32690 .28426 .24719 .21494 .18691 .16253 .14133 .12289 .10687 .09293 .08081 .07027 .06110 TABLE 4 Present Value of an Annuity of 1 (n) Payments 4% .96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 7.43533 8.11090 8.76048 9.38507 9.98565 10.56312 11.11839 11.65230 12.16567 12.65930 13.13394 1 3.59033 5% 6% 7% 8% 9% .95238 .94340 0.93458 .92593 91743 1.85941 1.83339 1.80802 1.78326 1.75911 2.72325 2.67301 2.62432 2.57710 2.53130 3.54595 3.46511 3.38721 3.31213 3.23972 4.32948 4.21236 4.10020 3.99271 3.88965 5.07569 4.91732 4.76654 4.62288 4.48592 5.78637 5.58238 5.389295.20637 5.03295 6.463216.20979 5.97130 5.74664 5.53482 7.10782 6.80169 6.51523 6.24689 5.99525 7.72173 7.360097.02358 6.71008 6.41766 8.30641 7.88687 7.49867 7.13896 6.80519 8.86325 8.38384 7.94269 7.53608 7.16073 9.39357 8.852688.35765 7.90378 7.48690 9.89864 9.294988.74547 8.24424 7.78615 10.37966 9.71225 9.10791 8.55948 8.06069 10.83777 10.10590 9.44665 8.85137 8.31256 11.27407 10.47726 9.76322 9.12164 8.54363 11.68959 10.82760 10.059099.371898.75563 12.08532 11.15812 10.33560 9.60360 8.95012 12.46221 11.46992 10.59401 9.81815 9.12855 10% 11% 12% 15% 90909 90090 .89286 .86957 1.73554 1.71252 1.69005 1.62571 2.48685 2.44371 2.40183 2.28323 3.16986 3.10245 3.03735 2.85498 3.79079 3.69590 3.60478 3.35216 4.35526 4.23054 4.11141 3.78448 4.86842 4.71220 4.56376 4.16042 5.33493 5.14612 4.96764 4.48732 5.75902 5.53705 5.32825 4.77158 6.14457 5.88923 5.650225.01877 6.49506 6.20652 5.93770 5.23371 6.81369 6.49236 6.19437 5.42062 7.103366.74987 6.42355 5.58315 7.36669 6.98187 6.62817 5.72448 7.60608 7.19087 6.81086 5.84737 7.82371 7.37916 6.97399 5.95424 8.02155 7.54879 7.11963 6.04716 8.2 0141 7.70162 7.24967 6.12797 8.36492 7.839297.36578 6.19823 8.51356 7.96333 7.46944 6.25933 20