Jefferson Countys Board of Representatives is considering the purchase of a site for a new sanitary landfill. The purchase price for the site is $234,000 and preparatory work will cost $88,080. The landfill would be usable for 10 years. The board hired a consultant, who estimated that the new landfill would cost the county $48,000 per year less to operate than the countys current landfill. The current landfill also will last 10 more years. For a landfill project, Jefferson County can borrow money from the federal government at a subsidized rate. The countys hurdle rate is only 6 percent for this project.

Use Appendix A (http://lectures.mhhe.com/connect/0077632451/Appendix%20A.jpg) for a reference.

1. Compute the net present value of the landfill

2. Calculate the landfill projects internal rate of return to the nearest whole percent.

3.

	1	2	3	4	5	6	7	8	9	10
Unrecovered investment @beg of year
Cost savings during year
Return on unrecovered investment
Recovery of investment
Unrecovered investment at end of year