A Company Produces Two Boat Models, Montauk and Orient $\begin{array}{cc}\underline{\text { Year }}& \underline{\text { PV factor of } \$ 1}\\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118\end{array}$

A company produces two boat models, Montauk and Orient.Both products are being considered for major investment projects next year.Relevant data follow:
$\begin{array}{lll}&\underline{\text { Montauk }}& \underline{\text { Orient }}\\\text { New investment }& \$ 400,000 &\$ 300,000\\\text { Expected 3-year net cash flows: }\\\text { Year 1 } & 150,000 & 130,000 \\\text { Year 2 } & 160,000 & 130,000 \\\text { Year 3 } & 170,000 & 130,000\end{array}$
$\begin{array}{cc}\underline{\text { Year }}& \underline{\text { PV factor of } \$ 1}\\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118\end{array}$
Required:
a. Calculate the net present value and the profitability index of the Montauk (assuming a discount rate of 12%).
b. Calculate the net present value and the profitability index of the Orient.
c. Which boat should the company acquire and why?