Question: 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

 Current Attempt In Progress Brooks Clinic is considering Investing in new

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 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 5%. Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life Option A Option B $183,000 $281,000 $70,000 $80,000 $28,000 $25,000 $48,000 $0 $0 $7,000 7 years 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.) (lf the net present value is negative, use elther a negative sign preceding the number eg -45 or parentheses eg (45). Round answers for present value and IRR to O decimal places, es 125 and round profitability Index to 2 decimal places, c.8. 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 MacBook Air

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