Question: 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
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 12 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. Elther method will require an initial capital outlay of $85,000. The inflows from projected business over the next five years are shown next Yeart 3 Method 530,000 10,200 39,500 36,300 25.700 Method 520,200 22,100 37.100 29,00 77.100 5 Use Arbendix B for an approximate answer but calculate your final answers using the formula and financial calculator methods. o. 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 Method 2 b. Which method should be selected using net present value analysis? Method
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