Question

The Camino Real Landfill was required to install a plastic liner to prevent leachate from migrating into the groundwater. The fill area was 48,000 m2 and the installed liner cost was $8 per m2. In order to recover the investment, the owner charges to unload at the rates of $18 per pickup, $25 per dump truck, and $70 per compactor truck load. The fill area is adequate for 5 years. If the annual traffic is estimated to be 2500 pickup loads, 650 dump-truck loads, and 1200 compactor-truck loads, what rate of return will the landfill owner make on the investment?

Answer 1

$ cost per m2 total fill area (m2) total cost 48,000 384,000 $ activity level of activity charge total revenue pickup 2,500 $ 18 $ 45,000 dump truck 650 $ 25 $ 16,250 compactor truck 1,200 $ 70 $ 84,000 total revenue $ 145,250 / life of investment (years) = annual revenue $ 29,050 5 rate of return per year = annual revenue / total cost rate of return per year = $29,050 / $384,000 rate of return per year = 7.57%