Net present value method, internal rate of return method, and analysis for a service company

The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows:

Required:

dollar.

Present value of annual net cash flows

Wind Turbines

Biofuel Equipment

Amount to be invested

Net present value

$1$b$.$ Compute a present value index for each project. If required, round your answers to two decimal places.

Present Value Index

Wind Turbines

Biofuel Equipment

three decimal places and internal rate of return to the nearest whole percent.

Present value factor for an annuity of $$1$

Internal rate of return

$\%$

$\%$

The net present value, present value index, and internal rate of return all indicate that the

is$/$are a better financial opportunity compared to the

although both investments meet the minimum return

criterion of $10\%.$