The Camino Real Landfill was required to install a plastic liner to prevent leachate from migrating into the groundwater. The fill area was 50,000 m2 and the installed liner cost was $8 per m2. In order to recover the investment, the owner charges to unĀ­load at the rates of $10 per pick-up, $25 per dump-truck, and $70 per compactor-truck load. The fill area is adequate for 4 years. If the annual traffic is estimated to be 2500 pick-up loads, 650 dump-truck loads, and 1200 compactor-truck loads, what rate of return will the landfill owner make on the investment?

What will be an ideal response?


0 = -50,000(8) + [(10(2500) + 25(650) +70(1200)](P/A,i*%,4)
125,250(P/A,i*%,4) = 400,000
(P/A,i*%,4) = 3.1936

Solve for i* by interpolation in interest tables or spreadsheet

i* = 9.6% per year (spreadsheet)

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