Need to determine the net present value under (A) and profitability index for (b)

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

Option 1. Option 2

Equipment purchase and installation. $71,100 $82,630

Annual cash flow $28,100 $30,250

Equipment overhaul in year 6 $4,890 -

Equipment overhaul in year 8 - $6,050

Click here to view the factor table.

(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