Blossom Clinic is considering investing in new heartmonitoring equipment. It has two options. Option A would have an initial lower
cost but would require a significant expenditure for rebuilding after years. Option B 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
a
Compute the net present value, profitability index, and 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.If the net present value is
negative, use elther a negative sign preceding the number eg or parentheses eg Round answers for present value and IRR to
decimal places, eg and round profitability index to decimal places, eg For calculation purposes, use decimal places as
displayed in the factor table provided.
