The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:

The wind turbines require an investment of $$668,140,$ while the biofuel equipment requires an investment of $$1,313,300.$ No residual value is expected from either project.

Required:

$1$b$.$ Compute a present value index for each project. If required, round your answers to two decimal places.

Present Value Index

Wind Turbines

Biofuel Equipment

Wind Turbines Biofuel Equipment

Present value factor for an annuity of $$1$

Internal rate of return

The net present value, present value index, and internal rate of return all indicate that the

is$/$are a better financial opportunity compared to the

although both investments meet the minimum return criterion of $10\%.$