Clark Creations is considering a proposal to sell an existing lathe and purchase a new computer-operated lathe. Information on the existing lathe and the computer-operated lathe follow:

	Existing lathe	computer-operated lathe
original cost	$100,000	$300,000
carrying value	40,000	-
fair value now	20,000	-
salvage value in 4 years	-	60,000
annual cash operating cost	200,000	50,000
remaining useful life	4 years	4 years

Assuming that the companys cost of capital is 10%, which is to be used in discounted cash flow analysis. Requirement:a) Compute the net present value of investing in the computer-operated lathe.b) Compute the profitability index of investing in the computer-operated lathe.