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.

Compute the net present value of the new landfill. Should the board approve the project?

  • CreatedApril 22, 2014
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