$4$

Problem $13-14($Algo$)$ Risk$-$adjusted discount rate $[$LO$13-3]$

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 $13$ percent discount rate. Method two $($explosion$)$ is less expensive to perform but more dangerous and will call for a higher discount rate of $17$ percent. Either method will require an initial capital outlay of $$106,000.$ The inflows from projected business over the next five years are shown next.

$\backslash$table$[[$Years$,$Method $1,$Method $2],[1,$$$32,200,$$$22,900$