WilliamBrownis evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life.Williamuses a12% discount rate.

Option 1 Option 2

Equipment purchase and installation $71,200 $82,800

Annual cash flow $29,000 $31,130

Equipment overhaul in year6 $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$

enter a dollar amount rounded to 0 decimal places

$

enter a dollar amount rounded to 0 decimal places

(b)

Calculate the profitability index of the two opportunities.(Round answers to 2 decimal places, e.g. 15.25.)

Option 1

Option 2

Profitability Indexenter profitability index rounded to 2 decimal places

enter profitability index rounded to 2 decimal places