Dixle Dynamite Company Is evaluating two methods of blowing up old buldings for commerclal purposes over the next five years. Method one

$($Implosion$)$ is relatively low In risk for this business and will carry a $11$ percent discount rate. Method two $($explosion$)$ Is less expensive to perform

but more dangerous and will call for a higher discount rate of $15$ percent. Elther method will require an initial capltal outlay of $$112,000.$ The

inflows from projected business over the next five years are shown next.

Use Appendix B for an approximate answer but calculate your final answers using the formula and financlal calculator methods.

a$.$ Calculate net present value for Method $1$ and Method $2.$

Note: Do not round Intermedlate calculations and round your answers to $2$ decimal places.

b$.$ Which method should be selected using net present value analysis?

Method $1$

Method $2$

Nelther of theseDixie 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 $11$ percent discount rate. Method two $($explosion$)$ is less expensive to perform but more dangerous and will call for a higher discount rate of $15$ percent. Either method will require an initial capital outlay of $$112,000.$ The inflows from projected business over the next five years are shown next.

Years Method $1$ Method $2$

$1$ $ $32,300$ $ $19,000$

$232,60031,000$

$340,90038,300$

$437,80034,800$

$521,40072,900$

Use Appendix B for an approximate answer but calculate your final answers using the formula and financial calculator methods.

Calculate net present value for Method $1$ and Method $2.$

Note: Do not round intermediate calculations and round your answers to $2$ decimal places.

Which method should be selected using net present value analysis?

multiple choice

Method $1$

Method $2$

Neither of these