Question 4 View Policies Current Attempt in Progress 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 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 7% Initial cost Annual cash inflows Annual cash outflows Cost to rebuild lend of year 4) Salvage value Estimated useful life Option A $177,000 $72,000 $28,500 $51,000 $0 7 years Option B $268,000 $81.700 $25,600 $0 $7,400 7 years Click here to view the factor table. 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 es (45). Round answers for present value and IRR to decimal places s 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 Profitability Index Internal Rate of Return Option AS Option B $ e Textbook and Media 115 PM Type here to search Salvage value Estimated useful life $0 7 years $7,400 7 years Click here to view the factor 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 decimal places 125 and round profitability index to 2 decimal places, e.g. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net Present Value Profitability Index Internal Rate of Return Option A $ Option B $ e Textbook and Media Attempts: 0 of 3 used Save for Later Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. Send to Gradebook 12/12/2019