Please answer the following question.

..Unit 8 Business Investment Decisions Quiz 8 (for marks) 2) Find the net present value of option 2: Payments (Cost) P/Y C/Y N I/Y 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 Toronto Hydro choose? Option 1 Option 2 Either option could be chosen 28 28199 SUnit 8 Business Investment Decisions Quiz 8 (for marks) 1) Find the net present value of option 1: Payments (Cost) Sale of equipment (Residual) P/Y = C/Y = N = I/Y = % 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) P/Y C/Y N 28195 5 S 28Question 2 Toronto Hydro has two options for upgrading a natural gas power station to meet new government standards. Option 1: Toronto Hydro will make the upgrades themselves. This is expected to cost $14,600 at the end of every six months for 12 years. At the end of the operation (in 12 years) Toronto Hydro expects to sell all equipment needed for the upgrade for $122,000. Option 2: Pay experienced contractors. This will cost $45,000 up front and $10,700 semi-annually for 14 years. Assume all interest is 2.27% 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 = NE I/Y = 28195 5 A S