Solve this question by doing mathematical calculations and tables:

Welsh Water (the water and wastewater company for Wales) undertook a study to assess the current capacity issues related to the existing infrastructure. Currently, the existing wastewater treatment works have capacity concerns and most of them are coming to the end of their useful life. The capacity issues relate to the quality of the effluents, which sometimes do not meet the environmental requirements and standards; posing threats to the environment and wildlife. Further, excessive inflows at peak times means that there is occasional wastewater overflow into local rivers and streams. The discharge of untreated wastewater into watercourses has attracted media attention and angered the public. Thousands of citizens sent letters to their MPs expressing their anger and frustration. The Welsh Government/ Natural Resources Wales, who is responsible for monitoring levels of water quality, has warned Welsh Water that it will be fined for failure to meet relevant environmental targets set out in the relevant environmental legislation.

For these reasons, and to meet the needs of the growing population (i.e. to treat additional flows), an intervention is urgently required to ensure that the population of Cardiff has access to an adequate level of facilities and services, and to protect the environment and public health

The project will allow Welsh Water to avoid an annual 1.5 Million fine. The annual penalty payment is estimated based on current performance levels and it factors in increases in quantities of raw sewage discharge due to population growth. This project will also assist Welsh Water to improve its reputation and image and restore public confidence.

The current population to be directly served from the project is estimated to be 100,000 capita at 2025, and is projected to grow to 150,000 capita in 2050, the end of its operational life.

The estimated wastewater production is 150 litre per capita. In the first year of operation, Welsh Water charges its customers 1.3 /m3 of wastewater. It also charges 280 connection fees for each new property. These fees are projected to increase by 2% each year.

In your calculation, assume 1,000 new properties are built in the catchment area of the plant each year. The operations and maintenance costs are estimated to be 1 Million in 2025 increasing by 3% each year.

The estimated investment/capital cost (CAPEX) are 60 Million (including an appropriate allowance for Optimism Bias as per the government guidelines). The investment/capital cost (CAPEX) includes the cost of design, construction, and all works required to deliver the plant in an operating state. It does not include the cost of land because the site is made available by the Welsh Government and no cost will be paid for its acquisition.

Use two financial techniques to evaluate the project.