Waec Model Questions Vol1 2022 Geography Question 7

A manufacturing firm is evaluating two possible sites for a new plant. Site A: land cost ₦500,000; labour cost ₦2,500 per worker per month; transport cost ₦0.30 per unit; distance to market 120 km. Site B: land cost ₦350,000; labour cost ₦3,000 per worker per month; transport cost ₦0.20 per unit; distance to market 200 km. The plant will produce 10,000 units per month and will employ 50 workers. Electricity cost without any renewable installation is ₦200,000 per month. The firm may install a solar power plant at an upfront cost of ₦2,000,000 which reduces electricity cost to ₦50,000 per month. The discount rate is 12 % per annum and the project life is 5 years. Using monthly discounting, determine which site (A or B) and whether to install the solar plant gives the lower net present value of total cash outflows (land, labour, transport, electricity). State the chosen site and the decision on the solar plant.