ABC Company is considering an alternative waste treatment technology for one of its fermentation products. The technology, a zero-discharge closed-loop system, would purify the waste water from the fermentation process and return it (in better shape than the available water from the standard source) to the production process. The process would produce sludge, useful as fertilizer due to the high concentration of nutrients, at the rate of 100 pound per month. ABC could sell the sludge to local farmers for an unknown price per pound.

The purchase price for the system, which has an expected life of five years with no salvage value, is $420,000. Preparing the facility and installing the system will cost $39,000 while training the operators on the new system will cost $27,000. Finally, shipping the equipment to the ABC facility will cost $14,000.

Various annual operating costs for the current and proposed systems are

Item	Current	Proposed
Water usage	$55,000	$10,000
Chemical usage	$15,000	$10,000
Sludge disposal	$50,000	$0
Discharge sampling (treated water to environment)	$45,000	$0
Filtration materials	$0	$15,000

Pharmaceutical companies reported an average return on equity of 23% over the past five years. ABCss average interest payments on its long-term debt are at a rate of 7% and its marginal tax rate is 30%. Its stock has a beta of 2.35 and current T-bill rates are 2% for one- year notes and 6% for 10-year notes. The company will pay for the new treatment system with available cash. Healys debt-to-equity ratio is 0.67 (2/3). Note that this does not mean that the proportion of debt is 67%.

What is the minimum price per pound of sludge that Healy must be able to obtain for the project to have a positive net present value?