Mutually exclusive projectsHook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the followingtable. Thefirm's cost of capital is 14%.

a.Calculate the net present value (NPV) of each press.

b.UsingNPV, evaluate the acceptability of each press.

c.Rank the presses from best to worst using NPV.

d.Calculate the profitability index(PI) for each press.

e.Rank the presses from best to worst using PI.

Initial investment $84,600 $60,400 $130,400

Year

1 $18,200 $12,200 $49,900

2 $18,200 $14,500 $29,500

3 $18,200 $15,500 $20,300

4 $18,200 $18,200 $19,800

5 $18,200 $19,900 $20,100

6 $18,200 $25,000 $30,200

7 $18,200 $0 $39,900

8 $18,200 $0 $49,800