William Brown is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life. William uses a 12% discount rate.

		Option 1		Option 2
Equipment purchase and installation		$71,200		$82,800
Annual cash flow		$29,000		$31,130
Equipment overhaul in year 6		$4,710		-
Equipment overhaul in year 8		-		$5,730

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	enter profitability index rounded to 2 decimal places

c) Which option should William choose?

William should choose select an option