Compute the net present value of the landfill

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Reference no: EM131959344

Jefferson County's Board of Representatives is considering the purchase of a site for a new sanitary landfill. The purchase price for the site is $234,000 and preparatory work will cost $88,080.

The landfill would be usable for 10 years. The board hired a consultant, who estimated that the new landfill would cost the county $48,000 per year less to operate than the county's current landfill. The current landfill also will last 10 more years.

For a landfill project, Jefferson County can borrow money from the federal government at a subsidized rate. The county's hurdle rate is only 6 percent for this project.

1. Compute the net present value of the landfill

2. Calculate the landfill project's internal rate of return to the nearest whole percent.

	1	2	3	4	5	6	7	8	9	10
Unrecovered investment @beg of year
Cost savings during year
Return on unrecovered investment
Recovery of investment
Unrecovered investment at end of year

Reference no: EM131959344

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