Analysis Proposal How much importance should be given to energy cost situation? It is of high importance; everyone nowadays is doing everything in the power to save on energy costs.
Consumers are willing to invest and/or modify devices to save energy. The government has created laws, websites, and special programs to educate and give incentives to consumers to ease with the transition to energy efficient machines. Energy efficiency has been in discussion since the sass's when physicist Emory Loving, suggested that instead of producing more energy, produce energy more efficiently.In some states (I. E. California) this idea was implemented, it became part of the building code and appliance standard.
This came in wake of the problems of pollution, "global warming," energy security, and "fossil fuel depletion. " The Federal government has adamantly been working towards energy efficiency and renewable energy in agencies. The US Department of Energy has a special division called the Federal Energy Management Program (FEM.). "FEM.
analyzes energy management authorities and develops rules and guidance to help Federal agencies comply with applicable requirements. (FEM., n. D.
Para. ) The concerns that Mr.. Loving had in the ass's have intensified.
Government agencies and consumers are very involved in the cause; their efforts will make this a norm nationwide and eventually into all developed countries. Which of the two compressors should be used in the refrigerator if you decide to go ahead with project and why? The two compressor results will virtually identical. Although, cost and warranty differed, both results look like a sound investment. In order, to decide I had to resort to all levels of demand and scenarios.
Although the CM-004 has lower overall total cost, further analysis will show that the TTS-ALL will provide better bottom line totals, NP and AIR. Based on the scenario and sensitivity analysis you performed above comment on the overall rockiness of the project: After running the analysis, the investment looks profitable according to my calculations. Even under the worst of conditions there would be a payback period of 7. 36 years and 6.
24 years for the CM-004 and TTS-112, respectively.The sensitivity analysis shows obviously whenever it goes under equilibrium that the company is living beyond their means. However, the change in NP"s shows low sensitivity in salvage value and cost of capital in the case CM-004. The slope in TTS-112 did seem to be more sensitive to hang.
This shows that although, CM-004 will be more costly, it will not be as sensitive to fluctuation as TTS-112. The TTS-112 analysis shows that even in it is more sensitive, especially at (20%) that deviation point.In conclusion, albeit that TTS-112 would provide more savings, it is less susceptible to NP change than CM-004. On the other hand, I do not see the sensitivity at the deviation point detrimental; I see that the TTS-112 has a higher NP (plus lower compressor expense), than the CM-004 best case scenario. Would recommend that Tests Works accept or reject the project? What s your basis for your recommendation? After analyzing the case, I definitely recommend this project. The appliance market is constantly changing to become more CEO-friendly.
Several states, government agencies, not-for-profit organizations, large percentage of the population have decided and support the "Go Green" movement. The government has listened to them and has passed strict regulations that require energy efficiency and renewable energy technology installed in appliance. These laws require builders and contractors to only use E. P. A approved products in certain parts of the country.
Tests Works is trying to cash in and keep up with the green movement, by modifying their appliance with custom compressors that will reduce energy cost.Thus, saving money for the end-user, plus doing their part for the environment. They have two compressors that are adequate for "energy star" appliances. First, is the CM-004 its cost is $280 with installation plus $40 for warranty a total of $320. The second is the TTS-112 it cost $260 with installation plus $50 for warranty a total of $310 (lower overall cost). Even though, there is only a ten dollar in the overall cost.
The difference n the cost per compressor made the difference. The results look very similar and the difference is relatively low as far as NP, AIR, Payback, and even the sensitivity chart.They would both make the company profit in the long run. Therefore, more scrutiny was needed, after calculating an average between cost and warranty, the TTS-ALL would save the company $769,363. 58 by the end of the refrigerators useful life.
Finally, the TTS-ALL, even under the worst case scenario had a higher NP that ranged from $4-$6 million higher than the CM-004. Also, they had shorter payback period in the absolute worst conditions, at 6. 4 years. The CM-004 needed a 1. 12 more years under the same conditions for payback.Even though, they were a tad more susceptible to change, they still outperformed the CM-004 under the same circumstances.
The TTS-ALL would be more profitable, lower costing, and return the investment under any of the sample scenarios. REFERENCES: (n. D. ). Retrieved from http://howl .
Ere. Energy. Gob/fem./index.
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B. (2010, January 12). Not-for-profit vs. non-profit - is there a difference?. Retrieved from http://tan. Org/
