Thunder Bay Hydro has two options for upgrading a geothermal power station to meet new government standards. Option 1: Thunder Bay Hydro will make the upgrades themselves. This is expected to cost $12,600 at the end of every three months for 14 years. At the end of the operation (in 14 years) Thunder Bay Hydro expects to sell all equipment needed for the upgrade for $115,000. Option 2: Pay experienced contractors. This will cost $43,000 up front and $15,000 quarterly for 12 years. Assume all interest is 3.75% 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 I/Y = % 96 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 CHY N I/ 96 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 Thunder Bay Hydro choose? Option 1 Option 2 Either option could be chosen Thunder Bay Hydro has two options for upgrading a geothermal power station to meet new government standards. Option 1: Thunder Bay Hydro will make the upgrades themselves. This is expected to cost $12,600 at the end of every three months for 14 years. At the end of the operation (in 14 years) Thunder Bay Hydro expects to sell all equipment needed for the upgrade for $115,000. Option 2: Pay experienced contractors. This will cost $43,000 up front and $15,000 quarterly for 12 years. Assume all interest is 3.75% 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 I/Y = % 96 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 CHY N I/ 96 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 Thunder Bay Hydro choose? Option 1 Option 2 Either option could be chosen