=+7-34 K Life-cycle costing OBJECTIVE 5 New Life Metal Recycling has just been given the opportunity to salvage scrap metal and other materials from an old industrial site.

The current owners of the site will sign over the site to New Life at no cost. New Life intends to extract scrap metal at the site for 24 months, and then will clean up the site, return the land to usable condition, and sell it to a developer. Projected costs associated with the project follow:

Fixed Variable Months 1–24 Metal extraction and processing $4 000 per month $100 per tonne Months 1–27 Rent on temporary buildings $2 000 per month —

Administration $5 000 per month —

Months 25–27 Clean-up $30 000 per month —

Land restoration $475 000 total —

Cost of selling land $150 000 total —

Ignore time value of money.

Required 1 Assuming that New Life expects to salvage 50000 tonnes of metal from the site, what is the total project life-cycle cost?