Western Dynamite Company is evaluating two new methods of blowing up buildings for commercial purposes over the next five years. Method 1 (implosion) is relatively low in risk for this business and will carry a 11 percent discount rate. Method 2 (explosion) is less expensive to perform, but it is more dangerous and will require a higher discount rate of 16 percent. Either method will require an initial capital outlay $96,000. The inflows from projected business over the next five years are given below.

Years	Method 1	Method 2
1	$33,600	$25,400
2	35,800	28,200
3	45,600	43,100
4	40,700	37,900
5	24,900	77,200

a. Calculate NPV for Method 1 and Method 2. (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

	Net present value
Method 1	$
Method 2	$

b. Which method should be selected using net present value analysis?

multiple choice

• Method 1

• Method 2

• Neither of these