Oriole 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%. Option A Option B Initial cost $193,000 $285,000 Annual cash inflows $72,900 $82.500 Annual cash outflows $28,700 $26,700 Cost to rebuild (end of year 4) $50,700 SO Salvage value SO $7.700 Estimated useful life 7 years 7 years Click here to view PV table. (a) 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 0 decimal places, eg. 125 and round profitability index to 2 decimal places, eg. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net Present Value Option A $ Option B S Profitability Index Internal Rate of Return % 96 TABLE 1 Future Value of 1 (n) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1 1.04000 1.05000 1.06000 1.07000 1.08000 1.09000 1.10000 1.11000 1.12000 1.15000 2 1.08160 1.10250 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.25440 1.32250 3 1.12486 1.15763 1.19102 1.22504 1.25971 1.29503 1.33100 1.36763 1.40493 1.52088 4 1.16986 1.21551 1.26248 1.31080 1.36049 1.41158 1.46410 1.51807 1.57352 1.74901 5 1.21665 1.27628 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 2.01136 6 1.26532 1.34010 1.41852 1.50073 1.58687 1.67710 1.77156 1.87041 1.97382 2.31306 7 1.31593 1.40710 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 2.66002 8 1.36857 1.47746 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 2.47596 3.05902 9 1.42331 1.55133 1.68948 1.83846 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 10 1.48024 1.62889 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556 11 1.53945 1.71034 1.89830 2.10485 2.33164 2.58043 2.85312 3.15176 3.47855 4.65239 12 1.60103 1.79586 2.01220 2.25219 2.51817 2.81267 3.13843 3.49845 3.89598 5.35025 13 1.66507 1.88565 2.13293 2.40985 2.71962 3.06581 3.45227 3.88328 4.36349 6.15279 14 1.73168 1.97993 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.88711 7.07571 15 1.80094 2.07893 2.39656 2.75903 3.17217 3.64248 4.17725 4.78459 5.47357 8.13706 16 1.87298 2.18287 2.54035 2.95216 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762 17 1.94790 2.29202 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 10.76126 18 2.02582 2.40662 2.85434 3.37993 3.99602 4.71712 5.55992 6.54355 7.68997 12.37545 19. 2.10685 2.52695 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 14.23177 201 2.19112 2.65330 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 16.36654 TABLE 2 Future Value of an Annuity of 1 (n) Payments 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 1.00000 1.00000 1.00000 1.0000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2 2.04000 2.05000 2.06000 2.0700 2.08000 2.09000 2.10000 2.11000 2.12000 2.15000 3 3.12160 3.15250 3.18360 3.2149 3.24640 3.27810 3.31000 3.34210 3.37440 3.47250 4 4.24646 4.31013 4.37462 4.4399 4.50611 4.57313 4.64100 5 5.41632 5.52563 5.63709 5.7507 5.86660 5.98471 4.70973 6.10510 6.22780 6.35285 4.77933 4.99338 6.74238 6 6.63298 6.80191 6.97532 7.1533 7.33592 7 7.89829 8.14201 8.39384 8.6540 8.92280 7.52334 9.20044 7.71561 7.91286 8.11519 8.75374 9.48717 9.78327 10.08901 11.06680 8 9.21423 9.54911 9.89747 10.2598 10.63663 11.02847 11.43589 11.85943 12.29969 13.72682 9 10.58280 11.02656 11.49132 11.9780 12.48756 13.02104 10 12.00611 12.57789 13.18079 13.8164 14.48656 15.19293 13.57948 14.16397 14.77566 15.93743 16.72201 17.54874 16.78584 20.30372 11 13.48635 14.20679 14.97164 15.7836 12 15.02581 15.91713 16.869941 17.8885 16.64549 18.97713 17.56029 20.14072 21.38428 18.53117 19.56143 24.349281 22.71319 24.13313 29.00167 20.65458 13. 16.626841 17.71298 18.88214 14 18.29191 15 20.02359 19.59863 21.57856 20.1406 21.49530 21.01507 22.5505 24.21492 23.27597 25.1290 27.15211 22.95339 26.01919 24.52271 26.21164 29.36092 28.02911 27.97498 30.09492 32.39260 40.50471 31.77248 47.58041 34.40536 37.27972 34.35192 16 21.82453 23.65749 17 23.69751 25.84037 18 25.64541 28.13238 30.90565 19 27.67123 30.53900 20 29.77808 33.06595 33.75999 36.78559 40.9955 25.67253 27.8881 28.21288 30.8402 33.9990 37.3790 30.32428 33.75023 33.00340 36.97351 37.45024 41.30134 35.94973 40.54470 45.59917 39.18995 42.75328 55.71747 44.50084 48.88367 65.07509 50.39593 55.74972 75.83636 41.44626 45.76196 51.16012 46.018461 51.15909 57.27500 56.93949 63.43968 88.21181 64.20283 72.05244 102.44358 TABLE 3 Present Value of 1 (n) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 .96154 .95238 .94340 .93458 .92593 .91743 .90909 90090 89286 .86957 2 .92456 .90703 89000 .87344 85734 84168 .82645 .81162 .79719 .75614 3 88900 .86384 .83962 81630 .79383 .77218 .75132 .73119 .71178 .65752 4 85480 82270 .79209 .76290 .73503 .70843 .68301 .65873 .63552 57175 5 .82193 .78353 .74726 .71299 .68058 .64993 .62092 .59345 56743 49718 6 .79031 .74622 .70496 .66634 .63017 .59627 .56447 53464 50663 43233 7 .75992 .71068 .66506 .62275 .58349 .54703 .51316 48166 45235 37594 8 .73069 .67684 .62741 .58201 54027 50187 46651 43393 .40388 32690 9 .70259 .64461 59190 .54393 .50025 46043 42410 39092 .36061 28426 10 .67556 .61391 55839 50835 46319 42241 .38554 35218 32197 24719 11 .64958 .58468 52679 47509 42888 38753 35049 31728 28748 21494 12 .62460 .55684 .49697 44401 .39711 .35554 31863 .28584 25668 .18691 13: .60057 53032 46884 41496 .36770 32618 28966 .25751 .22917 .16253 14 57748 .50507 44230 .38782 34046 29925 26333 .23199 20462 .14133 15 .55526 48102 .41727 36245 31524 27454 23939 20900 .18270 .12289 16 .53391 45811 39365 .33873 29189 25187 21763 18829 .16312 .10687 17 .51337 43630 .37136 .31657 27027 .23107 19785 .16963 14564 .09293 18 49363 41552 35034 29586 25025 21199 .17986 15282 13004 08081 19 47464 .39573 .33051 27615 23171 .19449 .16351 13768 .11611 .07027 20 45639 .37689 31180 25842 21455 17843 .14864 12403 .10367 .06110 TABLE 4 Present Value of an Annuity of 1 (n) Payments 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 96154 .95238 .94340 .93458 .92593 .91743 .90909 .90090 .89286 .86957 2 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 3 2.77509 2.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 4 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 5 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 6 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448 7 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 8 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 9 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 10 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.14612 4.96764 4.48732 5.53705 5.32825 4.77158 5.01877 11 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 12 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 13 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 14 10.56312 9.898641 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 15 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 17 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716 18 12.65930 11.68959 10.82760 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 19 13.13394 12.08532 11.15812 10.33560 9.60360 8.95012 8.36492 7.83929 7.36578 6.19823 20 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933