Prior to the investment decision at hand the company made investments in saving

Prior to the investment decision at hand the company

This preview shows page 210 - 215 out of 217 pages.

Prior to the investment decision at hand, the company made investments in saving ideas (e.g., replacing incandescent light bulbs with more energy effic fluorescent bulbs). The specific investment proposal being evaluated is the purchase of a wind help meet the power needs of the resort. The importance of this decision is rapidly increasing electric rates paid by the company. 2. List the major relevant costs and cost savings (benefits) associated w decision proposal you identified above in 1. ● the net investment outlay for the wind turbine was partially offset by a grant ($5 Renewable Energy Trust Fund (supported by a special charge on Massach
Image of page 210

Subscribe to view the full document.

bills) utility (~$160,000) ● sale of renewable energy credits (RECs) to a third party (~$167,000 per y ● state, federal, and (perhaps) local tax credits (~$46,000 per year, for 10 ye ● annual maintenance and insurance costs (~$75,000) 3. Describe any nonfinancial benefits associated with the proposed inves As described in the article: ● the proposed investment (sustainable energy production) helps fulfill a --to protect the environment ● the investment may help attract more visitors (i.e., those individuals wh more environmentally conscious) ● impact of the decision on endangered species, birds, and wetlands ● emission offsets (carbon dioxide, sulfur oxide, and nitrogen oxide) ● the experience and knowledge gained through an analysis of the wind- allowed the owners to branch out into a new business venture: EOS Ve 4. According to the authors, what primary role can management account terms of evaluating capital investment proposals, similar to the one fa management of Jiminy Peak Mountain Resort? The following critical roles in the capital investment analysis process can be organization's management accountants: ● Identifying relevant costs and benefits (both financial and nonfinancial)- above; the general checklist included as Table 1 in the article can be us investment-evaluation process ● Conducting a post-investment analysis (i.e., a post audit) of the investm article provides an example of an ongoing (i.e., an annual) post-investm report that can be prepared by the management accountant ● Preparing a lifecycle cost analysis (i.e., comparison of cumulative expe financial and nonfinancial costs and benefits associated with the investm ● excess energy generated by the wind turbine could be diverted (i.e., sold) to the
Image of page 211
mountain-resort-wind-turbine-zephyr?_s=PM:TECH tion (i.e., decision) ajor respects: (1) it energy consumption e artifically made n an array of energy- cient compact turbine that would heightened by the with the investment 582,000) from the husetts electric
Image of page 212

Subscribe to view the full document.

year) ears) stment. corporate mission ho are considered -turbine project entures, LLC tants play in aced by the e assumed by the --see parts 2 and 3 sed to start the ment; Table 2 in the ment performance ected versus actual ment) e electric
Image of page 213
Pr. 12-62: Sensitivity Analysis--Two Variable Data Table Item Year(s) CF Net Investment outlay 0 ($350,000) Annual after-tax cash inflow 1-5 $100,000 Discount Rate 10% PV Annuity Factor 3.791 NPV Analysis Net Investment Outlay ($350,000) $29,078.68 $90,000 $100,000 $110,000
Image of page 214

Subscribe to view the full document.

Image of page 215
  • Spring '18

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes