Dixie Dynamite Company is evaluating two methods of blowing up old buildings for commercial purposes over the next five

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Dixie Dynamite Company Is Evaluating Two Methods Of Blowing Up Old Buildings For Commercial Purposes Over The Next Five 1 (30.27 KiB) Viewed 105 times

Dixie Dynamite Company is evaluating two methods of blowing up old buildings for commercial purposes over the next five years. Method one (implosion) is relatively low in risk for this business and will carry a 10 percent discount rate. Method two (explosion) is less expensive to perform but more dangerous and will call for a higher discount rate of 15 percent. Either method will require an initial capital outlay of $108,000. The inflows from projected business over the next five years are shown next Years 1 2 3 Method 1 $29,800 38,000 40,300 37,700 28,709 Method 2 $19,500 23,800 38,800 35,600 76,700 5 Use Appendix B for an approximate answer but calculate your final answers using the formula and financial calculator methods a. Calculate net present value for Method 1 and Method 2. (Do not round Intermediate calculations and round your answers to 2 decimal places.) Net Present Value Method 1 Method 2