Question
Over the past several years, decommissioned U.S. warships have been tumed into artificial reefs in the ocean by towing them out to sea and
Over the past several years, decommissioned U.S. warships have been tumed into artificial reefs in the ocean by towing them out to sea and sinking them. The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life. In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate. Now the US government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet.) Assume that a recently decommissioned aircraft carrier, the USS Hudak, is estimated to contain approximately 40 tons of recyclable materials able to be sold for approximately $339 million. The low bid for diamanting and transporting the ship matenals to appropriate faclibes is $35 1 million Recycling and dismantling the ship would create about 500 jobs for about a year in the Rust Belt. This geographic area has been experiencing record-high unemployment rates in recent years. Read the requirements Requirement 1. Is it more financially advantageous to sink the ship (assume that it costs approximately $0.8 million to tow a ship out to sea and sink it) or to dismantle and recycle it? Show your calculations. (Enter dollar amounts in millions. Enter the net difference with a minus sign or parentheses is the cost to dismante and recycle is less than the cost to sink) Cost to dismantle and recyde Bid price Less scrap value Cost to sink U.S. Government Financial Decision Net difference in favor of (against) sinking
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