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Waterloo North Hydro has two options for upgrading a geothermal power station to meet new government...

Waterloo North Hydro has two options for upgrading a geothermal power station to meet new government standards. Assume all interest is 4.19% compounded annually. Option 1 Waterloo North Hydro will make the upgrades themselves. This is expected to cost $46,700 per year from year 1 until the end in 21 years. At the end of the operation (in 21 years) Waterloo North Hydro expects to sell all equipment needed for the upgrade for $96,000. Option 2 Pay experienced contractors. This will cost $33,300 up front and $56,600 annually for 13 years.

1) Find the net present value of Option 1: $

2) Find the net present value of Option 2: $

3) Which option should Waterloo North Hydro choose?

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Please upvote if the ans is helpful. In case of doubt,do comment. Thanks.

jeff jeffy answered 1 year ago
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