Alternative methods for the disposing of municipal waste

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Cleanville Environmental Services is evaluating two alternative methods for the disposing of municipal waste. The first involves developing a landfill site near the city. Costs of the site include $1 000 000 start-up costs, $100 000 closedown costs 30 years from now, and operating costs of $20 000 per year. Starting in 10 years, it is expected that there will be revenues from user fees of $30 000 per year. The alternative is to ship the waste out of the region. An area firm will agree to a long-term contract to dispose of the waste for $130 000 per year. Using the annual worth method, which alternative is economically preferred for a MARR of 11 percent? Would this likely be the actual preferred choice?

Reference no: EM131204866

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