Please don't copy it from anywhere else. thank you~ 11-22. Extended Learning Exercise Consider...

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Please don't copy it from anywhere else. thank you~

11-22. Extended Learning Exercise Consider these two alternatives for solid-waste removal (11.3, Chapter 7): Alternative A: Build a solid-waste processing facility. Financial variables are as follows: Capital investment $108 million in 2008 (commercial operation started in 2008) Expected life of facility 20 years Annual operating $3.46 million expenses Estimated market value 40% of initial capital cost at all times Alternative B: Contract with vendors for solid-waste disposal after intermediate recovery. Financial variables are as follows: Capital investment $17 million in 2008 (This is for intermediate recovery from the solid-waste stream.) Expected contract 20 years period Annual operating $2.10 million $ expenses Repair costs to $3.0 million intermediate recovery system every five years Annual fee to vendors $10.3 million Estimated market value SO at all times Related Data: : MACRS (GDS) property class 15 yr (Chapter 7) Study period 20 yr Effective income tax rate 40% Company MARR (after-tax) 10% per year Inflation rate 0% (ignore inflation) a. How much more expensive (in terms of capital investment only) could Alternative B be in order to breakeven with Alternative A? b. How sensitive is the after-tax PW of Alternative B to cotermination of both alternatives at the end of year 10 c. Is the initial decision to adopt Alternative Bin Part (a) reversed if our company's annual operating expenses for Alternative B ($2.10 million per year) unexpectedly double? Explain why (or why not). d. Use a computer spreadsheet available to you to solve this

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