Harrison Township is studying a 700-acre site for a new landfill. The new site will save $70,000 in annual operating costs for 10 years, as Harrison currently uses the landfill of a neighboring municipality. Other data are:
Purchase price per acre: $550
Site preparation costs: $110,000
Hurdle rate: 6%
Ignore income taxes.
Required:
A. Use the net-present-value method and determine whether the landfill should be acquired.
B. Determine the landfill's approximate internal rate of return.

Question

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The Answer of Harrison Township is studying a 700-acre site for a new landfill. The new site will save $70,000 in annual operating costs for 10 years, as Harrison currently uses the landfill of a neighboring municipality. Other data are:
Purchase price per acre: $550
Site preparation costs: $110,000
Hurdle rate: 6%
Ignore income taxes.
Required:
A. Use the net-present-value method and determine whether the landfill should be acquired.
B. Determine the landfill's approximate internal rate of return.

Harrison Township Is Studying a 700-Acre Site for a New