A plastics manufacturer is considering the installation of a new recycling system. There are two candidate designs, A and B.

The details for System A are as follows:

Cost of equipment ($):50,000 Cost of installation ($):5,000 Operations and Maintenance Cost ($/year):3,000 Marginal cost of recycling plastic ($/ton):200 Volume of recycling (tons/year):500 Marginal revenue of recycling ($/ton):450

The details for System B are as follows:

Cost of equipment ($):70,000 Cost of installation ($):5,000 Operations and Maintenance Cost ($/year):3,000 Marginal cost of recycling plastic ($/ton):170 Volume of recycling (tons/year):1,000 Marginal revenue of recycling ($/ton):500

Both the purchase of equipment and installation take place at the end of year 0. The systems last for 10 years.

Discount rate 8%

Evaluate the acceptability of the systems based on the following criteria: A. Net present value (NPV) of Profit

B. Which system is more cost effective?

Use the tabular form for showing the life cycle costs and revenues.