Question

If collected when products are sold, how much would the fee need to be to pay for end-of-life recycling, if your state can invest this fee at an interest rate of 3.5%? If collected at end-of-life, the fee would be the direct cost to recycle.
Assume that consumers keep devices on the following schedule:
Cell phones, tablets, small laptops (screen size: 4”-15”): 2 years, costs $3.50 on average to recycle
Large laptops, desktop monitors, small TVs (screen size: 15”-35”): 3 years, costs $5.00 on average to recycle
TVs (screen size: > 35”): 4 years, costs $8.00 on average to recycle

Answer 1

Average cost to recycle cell phones, tablet, small laptop = $3.50

Average life (n) = 2 years

Interest rate (i) = 3.5% or 0.035

Calculate the fees to be collected at the time of sale -

Fee = Average cost of recycle/(1 + i)n

Fee = $3.50/(1 + 0.035)2

Fee = $3.50/1.0712

Fee = $3.27

Thus,

The fee needed to be paid for the end-of-life recycling of cell phones, tablet, and small laptops is $3.27 per item on average.

Average cost to recycle large laptops, desktop monitors, small TVs = $5.00

Average life (n) = 3 years

Interest rate (i) = 3.5% or 0.035

Calculate the fees to be collected at the time of sale -

Fee = Average cost of recycle/(1 + i)n

Fee = $5.00/(1 + 0.035)3

Fee = $5.00/1.1087

Fee = $4.51

Thus,

The fee needed to be paid for the end-of-life recycling of large laptops, desktop monitors, small TVs is $4.51 per item on average.

Average cost to recycle large TVs = $8.00

Average life (n) = 4 years

Interest rate (i) = 3.5% or 0.035

Calculate the fees to be collected at the time of sale -

Fee = Average cost of recycle/(1 + i)n

Fee = $8.00/(1 + 0.035)4

Fee = $8.00/1.1475

Fee = $6.97

Thus,

The fee needed to be paid for the end-of-life recycling of large TVs is $6.97 per item on average.