Requirement One: Use the data to compute for each option the NPV at discount rates of 6 percent, the BCR at the same rates, and the internal rate of return.

(the capital cost is added to the operating and maintenance cost)

Requirement Two: Which of the two options do you recommend as an investment and why?

		Option A (using Discount Rates of 6%)							Option B (using Discount Rates of 6%)				Option A		Option B
Year	Total Cost	Present Value	Benefits		Present Value		Year	Total Cost	Present Value	Benefits	Present Value		Cash Flows		Cash Flows
1	2,000,000		$0				1	2,500,000		0
2	750,000		$680,000				2	925,000		575,000
3	375,000		$680,000				3	175,000		575,000
4	65,000		$680,000				4	80,000		575,000
5	65,000		$680,000				5	80,000		575,000
6	65,000		$680,000				6	80,000		575,000
7	65,000		$680,000				7	80,000		475,000
8	65,000		$680,000				8	80,000		475,000
9	65,000		340,000				9	80,000		475,000
10	65,000		340,000				10	80,000		475,000
										4,775,000
		NPV, 6%							NPV, 6%
		BCR, 6%							BCR, 6%				IRR		IRR