You are a consultant to the City of Dallahassee, helping to formulate the city's solid waste...

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You are a consultant to the City of Dallahassee, helping to formulate the city's solid waste policy for the next two decades. One of the critical issues the city faces is whether to build municipal composters for recycling and conservation. The composting is a technology whereby paper, food, yard waste, and plastics are mechanically separated from household trash bags and converted into a nice and clean mulch. In this way, garbage can be recycled. Your objective is to determine whether the city should build a compositing facility. Below is some information you have collected for your analysis: The cost to set up the composting facility is 45 million. The useful life of this facility is 20 years Discount rate: 6% Solid waste collection days per year: 260 ● ● Solid waste per collection day Cost to process per ton of solid waste Revenue from sales of mulch and garbage collection fee (per ton of solid waste) Year 1 to Year 10 800 tons $180 $190 Year 11 to Year 20 1000 tons (due to population growth) $140 $170 1) Based on the NPV, is it a good project to invest? (10%) 2) If the benchmark IRR is 8%, should the city invest or not? (10%) You are a consultant to the City of Dallahassee, helping to formulate the city's solid waste policy for the next two decades. One of the critical issues the city faces is whether to build municipal composters for recycling and conservation. The composting is a technology whereby paper, food, yard waste, and plastics are mechanically separated from household trash bags and converted into a nice and clean mulch. In this way, garbage can be recycled. Your objective is to determine whether the city should build a compositing facility. Below is some information you have collected for your analysis: The cost to set up the composting facility is 45 million. The useful life of this facility is 20 years Discount rate: 6% Solid waste collection days per year: 260 ● ● Solid waste per collection day Cost to process per ton of solid waste Revenue from sales of mulch and garbage collection fee (per ton of solid waste) Year 1 to Year 10 800 tons $180 $190 Year 11 to Year 20 1000 tons (due to population growth) $140 $170 1) Based on the NPV, is it a good project to invest? (10%) 2) If the benchmark IRR is 8%, should the city invest or not? (10%)

Answer rating: 100% (QA)

A 11 NPV Analysis 2 3 4 Year 5 Initial Investment 6 Waste Processing Cost 7 Revenue from sales of mu... View the full answer