Question: My work Problem 13-14 Risk-adjusted discount rate (LO13-3) Dixie Dynamite Company is evaluating two methods of blowing up old buildings for commercial purposes over the
My work Problem 13-14 Risk-adjusted discount rate (LO13-3) Dixie Dynamite Company is evaluating two methods of blowing up old buildings for commercial purposes over the next five years. Method one fimplosion) 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 $92,000. The inflows from projected business over the next five years are shown next Years Method 1 Method 2 $31, 100 $20,800 2 37,200 24,400 44,600 42,200 38,800 37,300 19,200 70,900 1 3 4 Use Appendix B for any approximate answer but calculate your final answers using the formule 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 $ 22.196.14
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
