Sunshine City Council (SCC) is evaluating the purchase of new Cyber Waste Site (CWS) Costs for the new Cyber Waste site are as follows:

Purchase Price	$234,000
Site set up work	$ 88,080

The new CWS site would be useable for 9 years. SCC has hired a consultant, who estimates that the new Cyber Waste site would cost $58000 per year less to operate than the current Cyber Waste site. The current Waste Site will also last 9 more years. For any waste site project, SCC can borrow money from the NSW Government at a subsidised rate. SCCs required rate of return is only 8% for this project. As a local government authority, it does not pay any income taxes.

Required: Please calculate the following. All calculations to 2 dpi.

22(a) What is the Net Present Value (NPV) of the new CWS site. (2 Marks)

Answer =

22(b) Based on NPV, should SCC approve the project. (1 mark)

Answer = Yes/No

State the reasons for your decision above (2 marks)

Answer =

22(c) What is the Internal Rate of Return (IRR) of the new GWS site? (2 marks)

Answer =

22(d) Based on IRR, should SCC approve the project. (1 mark)

Answer = Yes/No

State the reasons for your decision above (2 marks)

Answer =

22(e) What is the payback period of the new CWS site (2 marks)

Answer =

22(f) Based on Payback Period, should SCC approve the project? (1 mark)

Answer = Yes/No

State the reasons for your decision above (2 marks)