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

A company produces two boat models, Montauk and Orient. Both products are being considered for major investment projects next year. Relevant data follow: $\begin{array}{lrl}&\text { Montauk}&\text { Orient }\\\text { New investment } & \$ 400,000 & \$ 300,000 \\\text { Expected 3-year net cash flows: } & & \\\text { Year 1 } & 150,000 & 130,000 \\\text { Year 2 } & 160,000 & 130,000 \\\text { Year 3 } & 170,000 & 130,000\end{array}$ $$\begin{array} { c c } \text { Year } & \text { PV factor of } \$ 1 \\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118\end{array}$$
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?