1) Sammi is the financial advisor for her company and is considering the purchase of excavation equipment which will cost $81,000. The purchase of this equipment is expected to save her company $10,328 at the end of every year for 9 years. At the end of the 9 years, she expects the excavation equipment to have a residual (inflow) value of $16,600. The company requires a 5.8% rate of return.

Toronto Hydro has two options for upgrading a hydro-electric power station to meet new government standards. 2) Option 1: Apeliaa will make the upgrades themselves. This is expected to cost $10,600 at the end of every six months for 13 years. At the end of the operation (in 13 years) Toronto Hydro expects to sell all equipment needed for the upgrade for $113,000. Option 2: Pay experienced contractors. This will cost $50,000 up front and $9,500 semi-annually for 11 years. Assume all interest is 2.09% compounded semi-annually.