Carolina 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 11%. Option A Option B Initial cost $169,600 $240,620 Annual cash inflows $79,500 $84,800 Annual cash outflows $37,100 $31,800 Cost to rebuild (end of year 4) $63,600 $ 0 Salvage value $ 0 $12,720 Estimated useful life 8 years 8 years Incorrect. 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.) (Round computations and final answer for net present value to 0 decimal places, e.g. 125. Round profitability index to 2 decimal places, e.g. 10.50.) Net Present Value Profitability Index Internal Rate of Return Option A $ 6321 12 % Option B $ 15 %