Straightforward net present value and internal rate of return
The City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows:
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Purchase cost: |
$450 per acre |
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Site preparation: |
$175,000 |
The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.
Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer.