1. Joe's Technology must choose between two repeatable methods of producing a new product. The initial costs and year-end cash benefits are as follows:

Year012345

Method M -$1,500,000880,000950,000550,000200,000

Method N -$2,500,0001,200,000 950,000700,000400,000300,000

Assume all cash flows occur at year-end and the company's required return is 4.57 percent.

Please compute the net present value ______________ and the equivalent annuity ________________ for Method M

Please compute the net present value ______________ and the equivalent annuity ________________ for Method N

Which production method should be used?_______________