Most economical-considering only tangible costs

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Reference no: EM131835097

Your client currently prints labels on aluminum cans using solvent-based ink. Costs for handling, transporting, recycling, and disposing the spent solvent are as follows:

Handling, labeling, record-keeping, operation, and maintenance: $8,000/y

Hazardous waste permits and fees: $5000/y

Hazardous waste transportation, and recovery by a commercial recycler: $30,000/y

It's generally more economical for a manufacturer to install a still to recover the spent solvent, than to send it to a commercial recycler. You find the following costs associated with installation and operation of a still, to eliminate the costs listed above:

Capital equipment: $100,000

Handling, labeling, record-keeping, operation, and maintenance: $18,000/y

a. Assuming a 10 year planning period with costs as given above, 8% available interest and 2% inflation compounded annually, and no equipment salvage value, find the net present value (NPV) of each process.

b. Which process is most economical, considering only tangible costs?

Reference no: EM131835097

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