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Daryl Kearns saved $260,000 during the 25 years that he worked for a major corporation Now he has retired at the age of 50 and has begun to draw a comfortable pension check every month. He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an initial payment of $191,500. The following table presents the estimated cash inflows for the two alternatives Opportunity #1 Opportunity #2 Year 1 $ 55,695 103,900 Year 2 $ 58,860 109,550 Year 3 $78,900 17,300 Year 4 $101,390 14,300 Mr. Kearns decides to use his past average return on mutual fund investments as the discount rate; it is 12 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? b. Compute the payback period for each project. Which should Mr. Kearns adopt based on the payback approach? TABLE 1 PRESENT VALUE OF 51 18 55 64 75 89 9 105 125 145 16 1 03 0.961535 0.952331 0.943396 0.934579 0.925926 0917431 0909091 0892857 2 0.024556 0907029 0.889996 0.373439 0.357339 0.577193 0.362069 0.633333 0841630 0.8264.46 0.797194 0.709.465 0.74316306944-14 3 0.359996 0.863333 0.339619 0.816293 0.793832 0.772133 0.751315 0.711750 0.674972 0.6-30650 0.575704 4 0.854304 0.322702 0.792091 0.762595 0.735030 0.703-425 0.683013 0.635513 0592000 0.552291 0.402253 5 0.821927 0.733526 0.747253 0712936 0.650583 0619931 0.620921 0.567427 0319309 0476113 0 401573 0.790315 0.746215 0.701961 0.000342 0.630170 0.596267 0.564474 0506631 0.455587 0.410142 0.334596 7 0.759915 0.710681 0.665057 0.622750 0.553490 0.547034 0.5131580452349 0.199637 0353830 0 279002 3 0.730690 0676839 0627412 0.582009 0 540269 0.501366 0:466507 0.403383 0.350559 0.305025 0.232565 9 0.702587 0.614609 0.591595 0.543934 0.500249 0.460123 0424096 0.3606100307503 0.262953 0.193507 10 0.673564 0.613913 0,558395 0 505349 0.463193 0422411 0.385543 0.321973 0.269744 0.226034 0.161506 0.619551 0.584679 0.526759 0.475093 0.425583 0.387533 0350194 0.287476 0236617 0.195417 0.134550 12 0.624597 0356837 0.496969 0.441012 0.397114 0.355535 0.315631 0.256675 0.207559 0.163463 0.112157 130.600574 0.530321 0.163839 0.414964 0.367693 0.326179 0289664 0 229174 0.192069 0.145227 0.093461 14 0.577475 0 505068 0.442301 0.357817 0.3.10161 0.299246 0.263331 0.201620 0.159710 0.123195 0.077857 15 0.555265 0481017 0.417265 0.362446 0.3152420 274533 0.239392 0.132696 0.140096 0.107927 0.064905 16 0.53300S 0453112 0.393616 0.335735 0.291990 0.251570 0217629 0.163122 0.122092 0.093041 0.0540SS 17 0.513373 0.436297 0.145644 0.371364 0316574 0270269 0.231073 0.197545 0.107300 0.000207 0.045073 15 0.493625 0.415521 0.350344 0.295564 0250249 0.130040 0 211994 0.179559 0.094561 0.069144 0.037561 0.116107 19 0082945 0474642 0 27650S 0.0590070031301 0.395734 0.231712 0.19-4190 0.16350S 0.330513 0 376559 20 0456397 0.214545 0.175431 0.103667 0072762 0.3115050258419 0.145614 0.051395 0026094 79 TABLE 2 PRESENT VALUE OF AN ANNUITY OF 51 11 43 5 64 89 99 10% 12 148 165 2013 0961538 0.952331 0.913396 0.934579 0.925926 0.917431 0909091 0392557 0.377193 0.562069 0.833333 1 856095 1 859410 1.833393 1 SOSOIS 1.783265 1.759111 1.735537 1,6900511616661 1.605232 1527773 2.775091 2.723248 2.673012 2.624316 2.577097 2.531295 2.456852 2.401831 2321632 2245590 2.106101 3.629995 3.545951 3.465106 3.387211 3.312127 3.239720 3.169365 3.037349 2913712 2.796131 2.586735 5 4:451822 4329477 4.212364 4100197 3.992710 3.589651 3.790757 3604776 3.433051 3.274294 2.990012 5242137 5.075692 4.917324 4.7665-10 4.622580 4.485919 4355261 4.111407 3.895663 3.684736 3.325510 7 6.002055 5.736373 5.582351 5.399239 5 206370 50329534 863419 4.563757 4.288305 4.035565 3.604592 8 6.732745 6.463213 6 209794 5.971299 5.746639 5.5348195,334926 4967640 4.638564 4343591 3.337160 9 7.435332 7.107822 6.801692 6.515232 6.246388 5.995247 5.759026 5.325250 4.946372 4.606544 4030967 10 S. 110596 7.721735 7:360087 7,023582 6.710051 6.417658 6.144567 565022352161164.533227 4.192472 11 8.760477 8:306414 7.556575 7.495674 7.133964 6,505191 6 495061 5.937699 5.452733 5 025644 4.327000 12 9385074 8.863252 8.333844 7.942686 7.536073 7.160725 6.813692 6.194374 5.660292 5.197107 4439217 13 9.9856-15 9.393573 3.852683 8.357651 7.903776 7.456904 7.103356 6.423543 5.942362 5.342334 4332631 14 10.563123 9.598641 9.294954 5.745468 3.244237 7.736150 7360037 6.628168 6.002072 5.467529 4,610567 15 10.379658 11.113387 9.712249 9.107914 5.559479 7606050 S060688 6.81056+ 6.142165 5.575456 +075473 16 11.652296 10.837770 10.105895 9446649 S.551369 5.312558 7.823709 6.973936 6 2650605663497 4.729561 17 11.274066 10.477260 9.763223 $ 543631 9.121635 12.165669 3.021553 7.119630 4774634 6.372859 5.748704 7249670 3.755625 10.527003 19 11.639587 12.659297 9.371587 10.059057 S.201412 6.467420 5.317543 4812195 6.550369 5.577455 8.905115 19 12055321 10.335595 5.364920 7365777 4343496 9.603599 13.133939 11.158116 7.469144 20 4569580 6.623131 10 591014 13 590326 5.926541 9.S18147 9.128546 12 462210 3.513564 11.469921 Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? (Round your intermediate calculations and final answer to two decimal places.) Opportunity 1 Opportunity 2 Which opportunity should be chosen? Net Present Value $ 455,165.36 $ 171,398.70 Opportunity 1 Required Required B > Complete this question by entering your answers in the tabs below. Required A Required Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach? Payback Period Opportunity 1 3 years Opportunity 2 (0) years Which opportunity should be chosen? Opportunity 2