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Invest in the New Energy Saving Equipment

Invest in the New Energy Saving Equipment

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With this information in mind, from a purely financial perspective alone, determine whether or not you would recommend to top management whether or not they should invest in the new energy saving equipment. Why or why not? Would there be nonfinancial factors to consider in making the investment other than the financial analysis you present to the CEO and other top management of your company?
With this information in mind, from a purely financial perspective alone, determine whether or not you would recommend to top management whether or not they should invest in the new energy saving equipment. Why or why not? Would there be nonfinancial factors to consider in making the investment other than the financial analysis you present to the CEO and other top management of your company?

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determine whether or not you would recommend to top management whether or not they should invest in the new energy saving equipment. from a purely financial perspective alone.com/homework-help/business-management-homeworkhelp/?utm_source=Scribd&utm_medium=SL_ebook&utm_term=busi *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.200.000 annually on their energy bill.000 to dismantle and make room for the new equipment. With this information in mind.Sub: Business Invest in the New Energy Saving Equipment Question: Topic: Managerial accounts You are the top managerial accountant for a medium size business that generates $5 million revenue annually. ness&utm_content=footer&utm_campaign=%5BDoc%2BUploads%5 D .000 http://classof1. Why or why not? Would there be nonfinancial factors to consider in making the investment other than the financial analysis you present to the CEO and other top management of your company? Solution Initial Investment Tax credit (1.200. The equipment would have an estimated market value of $640.000 and a useful life of 10 years.000 and would probably be sold for that price at end of the 10 years useful life. From reliable information gathered you determine that the new equipment would save your company $120.000 in the initial year of purchase of the energy saving equipment. Currently owned equipment is obsolete and would cost $100. Energy tax credits legislated by Congress in a prior year would allow a 15% tax credit on the investment cost of $1. The company has a minimum cost of capital requirement for capital investments of 10%.000) 180.200. The company for which you work is concerned about rising energy costs and wants you to investigate modern energy saving equipment that would have an initial investment cost of $1.

com/homework-help/business-management-homeworkhelp/?utm_source=Scribd&utm_medium=SL_ebook&utm_term=busi *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for submitting the same in lieu of their academic submissions for grades.17 90.120.000) 91 4 8 2 1 7 9 1 2 13 (135. there will be non financial factors surrounding this investment proposal to be presented to the CEO.0 120. Yes.0 120. This is good for our planet and environment and would be accounted under our corporate social responsibility initiatives.0 120.15 81.0 120.0 120.0 (1. The world stresses on the need to conserve energy and thus.904) Thus.0 120.0 00 00 00 00 00 00 00 00 00 00 Salvage value Energy bill savings Dismantling and installaion charge PV of Cashflows @10% NPV (100.0 120. ness&utm_content=footer&utm_campaign=%5BDoc%2BUploads%5 D .0 120.89 293. on a purely financial basis. installing the new equipment will help us save energy. the company should not invest in the new energy saving equipment as the NPV is negative. http://classof1.98 50.0 00 120.Sub: Business Topic: Managerial accounts 640.000) 109.96 74.0 120.73 61.51 67.0 99.57 55.

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