London Hydro has two options for upgrading a hydro-electric power station to meet new government standards. Option 1: London Hydro will make the upgrades themselves. This is expected to cost $12,800 at the end of every six months for 13 years. At the end of the operation (in 13 years) London Hydro expects to sell all equipment needed for the upgrade for $106,000. Option 2: Pay experienced contractors. This will cost $47,000 up front and $11,400 semi-annually for 12 years. Assume all interest is 3.53% compounded semi-annually. 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 = 96 36 PV = $ PMT= $ $ FV $ (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.) NPV (Option 1) - $ 2) Find the net present value of option 2: Payments (Cost) PHY C/Y N 1/Y 986 PV PMT FV (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.) NPV (Option 2) - $ 3) Which option should London Hydro choose? Option 1 2 25C 3) Which option should London Hydro choose? Option 1 O Option 2 Either option could be chosen Submit