The City of Bedford is studying a 600 acre site on Route 356 for a new landfill. The startup cost has been computed as follows:
Purchase cost: $450 per acre
Site preparation: $175,000
The site can be employed for 20 years before it reaches capacity. Bedford, that shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.
Should the landfill be acquired if Bedford desires an 8 percent return on its investment? Use the net-present-value method to find out your answer.