Kenneth Clark is evaluating two new business opportunities. Each ofthe opportunities shown below has a 15-year life. Kenneth uses a 12% discount rate. Option 1 Option 2 Equipment purchase and installation $72,000 $83,270 Annual cash ow $28,800 $30,860 Equipment overhaul in year $4,620 - Equipment overhaul in year8 - $5,990 Click here to view the factor table. \fAPPENDIX 9.2 Present value of an annuity of $1 per period. PVAM- = i Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20% 1 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 2 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 3 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 4 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5887 5 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9906 6 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.2305 4.1114 3.9975 3.8887 3.6847 3.4976 3.3255 7 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.0386 3.8115 3.6046 8 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 5.1461 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 9 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 10 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.8892 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 11 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 6.2065 5.9377 5.6869 5.4527 5.0286 4.6560 4.3271 12 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.4924 6.1944 5.9176 5.6603 5.1971 4.7932 4.4392 13 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.7499 6.4235 6.1218 5.8424 5.3423 4.9095 4.5327 14 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.9819 6.6282 6.3025 6.0021 5.4675 5.0081 4.6106 15 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 7.1909 6.8109 6.4624 6.1422 5.5755 5.0916 4.6755 16 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 7.3792 6.9740 6.6039 6.2651 5.6685 5.1624 4.7296 17 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.5488 7.1196 6.7291 6.3729 5.7487 5.2223 4.7746 18 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.7016 7.2497 6.8399 6.4674 5.8178 5.2732 4.8122 19 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.8393 7.3658 6.9380 6.5504 5.8775 5.3162 4.8435 20 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.9633 7.4694 7.0248 6.6231 5.9288 5.3527 4.8696 $1 1 (1 + i)\" (a) Calculate the net present value of the two opportunities. (Round present value factor calculations to 4 decimal places, e.g. 1.2514 and the final answers to 0 decimal places, e.g. 59,991.) Option 1 Option 2 Net present value $ $(b) Calculate the profitability index of the two opportunities. (Round answers to 2 decimal places, e.g. 15.25.) Option 1 Option 2 Profitability Index