A battery manufacturing plant has been ordered to cease discharging acidic waste

Question

A battery manufacturing plant has been ordered to cease discharging acidic waste liquids containing mercury into the city sewer system. As a result, the firm must now adjust the pH and remove the mercury from its waste liquids. Three firms have provided quotations on the necessary equipment. An analysis of the quotations provided the following table of costs.

Bidder: Foxhill Instrument
Installed Cost: 35,000
Annual Operating Cost: 8,000
Annual Income from Mercury Recovery: 2000
Salvage Value: 20,000

Bidder: Quicksliver
Installed Cost: 40,000
Annual Operating Cost: 7,000
Annual Income from Mercury Recovery: 2200
Salvage Value: 0

Bidder: Almaden
Installed Cost: 100,000
Annual Operating Cost: 2000
Annual Income from Mercury Recovery: 3500
Salvage Value: 0

If the installation can be expected to last 20 years and money is worth 7%., which equipment should be purchased?

Explanation / Answer

You can enter the values into a financial calculator or into Microsoft Excel. The present values are as follows: -$63,564.09 -$50,851.27 $15,891.02 But we have to subtract off the initial costs to get the net present value. NPV: -$98,564.09 -$90,851.27 -$84.108.98 Since, the NPV of Almaden is associated with the smallest amount of loss, it is the best option.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.