Question

The world's largest carpet marker has just completed a feasibility study of what to do with the 16,000 tons of overruns, rejects, and remnants it produces every year. The company's CEO launched the feasibility study by asking, why pay someone to dig coal out of the ground and then pay someone else to put our waste into a landfill? Why burn our own waste? The company is proposing to build a $10 million power plant to burn its waste as fuel, thereby saving $2.8 million a year in coal purchases. Company engineers have determined that the waste-burning plant will be environmentally sound, and after its four-year study period the plant can be sold to a local electric utility for $5 million. What is the main reason for the company proposing to build a waste-burning power plant?

1) To save money on coal purchases
2) To reduce waste in landfills
3) To generate electricity
4) To sell the plant to a local electric utility

Answer 1

The main reason for the company proposing to build a waste-burning power plant is to save money on coal purchases, to the tune of $2.8 million a year.

Step-by-step explanation:

The primary reason the company is proposing to build a waste-burning power plant is to save money on coal purchases. By burning waste as fuel instead of purchasing coal, the company is projected to save $2.8 million a year. This financial benefit aligns with the company's goal to reduce operational costs and increases profitability. Moreover, engineers have determined that the waste-burning plant will be environmentally sound, further justifying the investment in such a facility. Although there are secondary benefits such as reducing waste in landfills and the potential to sell the plant to a local electric utility, the main motivation is the significant cost savings on coal.