Lego Group in Bellund, Denmark, manufactures Lego toy construction blocks. The company is considering two methods for producing special-purpose Lego parts. Method 1 will have an initial cost of $310,000, an annual operating cost of $105,000, and a life of 3 years. Method 2 will have an initial cost of $710,000, an operating cost of $150,000 per year, and a 6-year life. Assume 10% salvage values for both methods. Lego uses an MARR of 15% per year.

Which method should it select on the basis of a present worth analysis?

The present worth of method 1 is $

and that of method 2 is $