JB Chemical currently discharges liquid waste into Calgary?s municipal sewer system. However, the Calgary municipal government has informed JB that a surcharge of $4 per thousand cubic liters will soon be imposed for the discharge of this waste. This has prompted management to evaluate the desirability of treating its own liquid waste.

A proposed system consists of three elements. The first is a retention basin, which would permit unusual discharge to be held and treated before entering the downstream system. The second is a continuous self-cleaning rotary filter required where solids are removed. The third is an automated neutralization process required where materials are added to control the alkalinity-acidity range.

The system is designed to process 500,000 liters a day. However, management anticipates that only about 200,000 liters of liquid waste would be processed in a normal workday. The company operates 300 days per year. The initial investment in the system would be $450,000, and annual operating costs are predicted to be $150,000. The system has a predicted useful life of ten years and a salvage value of $50,000.

JB Chemical currently discharges liquid waste into Calgary's municipal sewer system. However, the P12-29. a. Annual cost of discharge into sewer [(XXXX/XXXX) $XX per thousand liters XXX days] Annual operating cost of proposed system Annual cost savings Present value of an annuity of $1 (n = XX; r = XX) Present value of operating cost savings $ XXXX XXXX $ XXXX XXXX $ XXXX Present value of salvage ($XXXX XXXX) Initial investment Net present value of investment XXXX XXXX $ XXXX b. The net present value is a positive amount at 14 percent, so the IRR must be larger than 14 percent. Net present value at 16 percent: Present value of annual cost savings and salvage: $XXXX XXXX $XXXX XXXX Initial investment Net present value Explain ???? $ XXXX XXXX XXXX $ XXXX c. XXXX / XXXX = XXXX $XXXX / $XXXX = XXXX years