A city corporation is considering two alternatives of waste disposal systems for managing city waste i.e. disposing in a landfill which is a permanent investment and setting up a waste treatment plant with a life of 20 years. Choosing landfill has an initial acquisition cost of Rs. 990 lakhs for acquiring land, annual operation and maintenance cost of Rs. 264 lakhs, and revenue of Rs. 120 lakhs per annum from the collection of plastic and other scrap material. There is no salvage value for this alternative since this is a permanent investment. What is the present worth of this alternative at an interest rate of 8% per annum? Note: You are comparing this with an alternative having 20 years of life. Answer:

A city corporation is considering two alternatives of waste disposal systems for managing city waste i.e. disposing in a landfill which is a permanent investment and setting up a waste treatment plant with a life of 20 years. Choosing landfill has an initial acquisition cost of Rs. 990 lakhs for acquiring land, annual operation and maintenance cost of Rs. 264 lakhs, and revenue of Rs. 120 lakhs per annum from the collection of plastic and other scrap material. There is no salvage value for this alternative since this is a permanent investment. What is the present worth of this alternative at an interest rate of 8% per annum? Note: You are comparing this with an alternative having 20 years of life. Answer:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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