Considering a new waste disposal system

Reference no: EM13700897

A city government in Arizona is considering a new waste disposal system. It has two options.

Option A needs an outlay of $500,000 and requires O&M costs of $50,000 annually

Option B needs an outlay of $450,000 with O&M cists of $95,000 annually.

Both projects have a 15 year life with no salvage value. At the end of the 15 years the city will re-evaluate the success of their assessed $100,000 per year to cover the new system. The standard interest rate for fund for the city is 6%. Your team has been requested to analyze the systems and decide which system to use. The city is used to seeing cost/benefit ratio analyses so you decide to use BC (i). Which system do you recommend? Show all calculations.

Reference no: EM13700897

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