Leonard, a company that manufactures explosion-proof motors, is considering two alternatives for expanding its international export capacity. Option 1 requires equipment purchases of $820,000 now and $520,000 two years from now, with annual M&O costs of $60,000 in years 1 through 10. Option 2 involves subcontracting some of the production at costs of $215,000 per year beginning now through the end of year 10. Neither option will have a significant salvage value. Use a present worth analysis to determine which option is more attractive at the companys MARR of 12% per year.

The present worth of option 1 is ?$ and

that of option 2 is ?$