Would you buy the sterilizer system

Reference no: EM131997260

Question: A medium-sized nonprofit company in a remote desert incurs a cost of $150 a month to bring bottle water to quench the thirst of its volunteers. Someone suggested that they could collect rainwater from their roof if they bought a cistern, roof liner, and sterilizer for a total of $4,500. The sterilizer needs maintenance which would cost $1,480 a year in parts and chemicals. The sterilizer has a life of 25 years and cannot be resold. The sterilized water will be put into plastic bottles which would cost $100 per year for the estimated 450 cases of bottles a year needed. A local recycling company will pick up the used plastic bottles and give the nonprofit company $0.10 per case for them. You must use annual cash flow analysis and assume an interest rate of 6%.

(a) Financially, is it worth it to sterilize the water instead of having water brought in?

(b) Would you buy the sterilizer system? Consider both economic and non-economic reasons.

Reference no: EM131997260

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