Question

Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them. The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life. In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate. Now the U.S. government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet.) Assume that a recently decommissioned aircraft carrier, the USS Bonefish, is estimated to contain approximately 40 tons of recyclable materials able to be sold for approximately $32.8 million. The low bid for dismantling and transporting the ship materials to appropriate facilities is $34.1 million. Recycling and dismantling the ship would create about 500 jobs for about a year in the Rust Belt. This geographic area has been experiencing record-high unemployment rates in recent years. Read the requirements. Requirement 1. Is it more financially advantageous to sink the ship (assume that it costs approximately $0.7 million to tow a ship out to sea and sink it) or to dismantle and recycle it? Show your calculations. (Enter dollar amounts in millions. Enter the net difference with a minus sign or parentheses is the cost to dismantle and recycle is less than the cost to sink.) U.S. Government Financial Decision Cost to dismantle and recycle Bid price $ 34.1 32.8 Less: scrap value Cost to sink Net difference in favor of (against) sinking Requirement 2. From a sustainability standpoint, what should be done with the decommissioned aircraft carrier? List some of the qualitative factors that should enter into this analysis.

Answer 1

Requirement 1:

Determine whether the ship should sink or dismantle as follows:

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Thus, the ship should dismantle and recycle.

Requirement 2:

From sustainability point of view, the decommissioned aircraft carrier should be dismantled and recycled.

Determine the qualitative factors that are considered into this analysis as follows:

1.

There should be a control on discharge of toxic waste and materials into oceans. It destroys marine life and also have adverse effects on human sustainability as well. The recycling process should not degrade the quality of water and life in the oceans.

2.

The recycled material so obtained after dismantling should be sold and will create abnormal revenue in th business that will be beneficial to the organization.

3.

The process of dismantling will require labor force, and thus it will create employment opportunities for the working labor and improve the standard of living.