Waste liquids through costly treatment process

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An oil refinery must now begin sending its waste liquids through a costly treatment process before discharging them. The engineering department estimates costs at $300,000 for the first year. It is estimated that if process and plant alterations are made, the waste treatment cost will decline $30,000 each year. As an alternate, a specialized firm, Hydro-Clean, has offered a contract to process the waste liquids for 10 years for $150,000 per year. Either way, there should be no need for waste treatment after 10 years. Use an 8% interest rate and annual cash flow analysis to determine whether the Hydro-Clean offer should be accepted.

Reference no: EM131083265

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