A Six Sigma project team is evaluating two options to reduce…

A Six Sigma project team is evaluating two options to reduce defective units. Both options have comparable capacity and quality levels, but different costs. The team must evaluate the costs over a five-year study period, with an MARR (an interest rate) of 8% per year. Option 1: Costs $11,500 now, has operating costs of $500 per year, and a salvage value of $1,500 after 5 years. Option 2: Costs $9,500 now, has operating costs of $1,000 per year, and a salvage value of $2,500 after 5 years. What is the net present worth of the cash flows for Option 1?    What is the net present worth of the cash flows for Option 2?    Which option should the team select?