Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service 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 main- tenance 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%. Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life Option A $160,000 $71,000 $30,000 $50,000 $0 7 years Option B $227,000 $80,000 $31,000 $0 $8,000 7 years Instructions a. (1) NPV A $16,709 (3) IRR B 12% a. Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each op- tion. (Hint: To solve for internal rate of return, experiment with alternative discount rates to arrive at a net present value of zero.) b. Which option should be accepted