Water processing technology to eliminate periodic lawsuits

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A gas company is evaluating new water processing technology to eliminate periodic lawsuits they face from environmental groups related to small wastewater spills. On average they face a S600.000 lawsuit (including all legal expenses) every five years. The company uses a discount rate of 12%, and wants to find a processing technology to provide a B-C ratio of 1.0. If the lawsuits are assumed to occur at the end of each 5-year period, and the technology will last for 15 years. What is the maximum price that the company would be willing to pay for the water processing technology?

Reference no: EM131444318

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