Show how to calculate the present value of this project

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The Newport Beach Sanitary Agency is presently shipping its waste to another municipality at an annual cost of $100,000. It is considering building a landfill near the city. Start-up costs for the landfill are $900,000, and there are closing costs of $500,000 that will be incurred 20 years after the landfill opens. In addition, annual operating costs are $25,000. The quarterly effective MARR is 2%.

a) Show how to calculate the present value of this project.

b) Explain why the IRR may not be well defined and show how to calculate the external rate of return for this project.

Reference no: EM13804986

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