Question
Hydro Ottawa has two options for upgrading a nuclear power station to meet new government standards. Option 1: Hydro Ottawa will make the upgrades themselves.
Hydro Ottawa has two options for upgrading a nuclear power station to meet new government standards.
Option 1: Hydro Ottawa will make the upgrades themselves. This is expected to cost $12,300 at the end of every three months for 12 years. At the end of the operation (in 12 years) Hydro
Ottawa expects to sell all equipment needed for the upgrade for $98,000.
Option 2: Pay experienced contractors. This will cost $40,000 up front and $11,900 quarterly for 15 years.
Assume all interest is 2.45% compounded quarterly.
Round the answers to NPV (Option 1), and NPV (Option 2) to the nearest dollar. Round all other answers to two decimal places where applicable.
1) Find the net present value of option 1: Payments (Cost) Sale of equipment (Residual) P/Y = C/Y = N = = 1/4 = % % PV = $ $ PMT = $ $ FV = $ $ (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter O.) NPV (Option 1) = $ = 1) Find the net present value of option 1: Payments (Cost) Sale of equipment (Residual) P/Y = C/Y = N = = 1/4 = % % PV = $ $ PMT = $ $ FV = $ $ (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter O.) NPV (Option 1) = $ =
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