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lasts longer than HID lighting on per fixture on per fixture (in present value terms) xture with LED

lasts longer than HID lighting on per fixture on per fixture (in present value terms) xture with LED

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Analyze a CSR capital investment proposal for Ganon Inc. Ganon Inc. is evaluating a proposal to replace its HID (high intensity discharge) lighting with LED (light emitting diode) lighting throughout its warehouse. LED lighting consumes less power and lasts longer than HID lighting for similar performance. The following information was developed: HID watt hour consumption per fixture LED watt hour consumption per fixture Number of fixtures Lifetime investment cost (in present value terms) to replace each HID fixture with LED 500 watts per hr. 300 watts per hr. 800 $300 10 300 $0.12 Operating hours per day Operating days per year Metered utility rate per kilowatt-hour (kw) Note: A kilowatt-hour is equal to 1,000 watts per hour. a. Determine the investment cost for replacing the 800 fixtres. 400,000 X c. Should the proposal be accepted? Yes b. Determine the annual utility cost savings from employing the new energy solution. 144,000 X Evaluate the proposal using net present value, assuming a 15-year life and 8% minimum rate of return. (Click here to view Present Value of Ordinary Annuity.)
Transcribed Image Text:Analyze a CSR capital investment proposal for Ganon Inc. Ganon Inc. is evaluating a proposal to replace its HID (high intensity discharge) lighting with LED (light emitting diode) lighting throughout its warehouse. LED lighting consumes less power and lasts longer than HID lighting for similar performance. The following information was developed: HID watt hour consumption per fixture LED watt hour consumption per fixture Number of fixtures Lifetime investment cost (in present value terms) to replace each HID fixture with LED 500 watts per hr. 300 watts per hr. 800 $300 10 300 $0.12 Operating hours per day Operating days per year Metered utility rate per kilowatt-hour (kw) Note: A kilowatt-hour is equal to 1,000 watts per hour. a. Determine the investment cost for replacing the 800 fixtres. 400,000 X c. Should the proposal be accepted? Yes b. Determine the annual utility cost savings from employing the new energy solution. 144,000 X Evaluate the proposal using net present value, assuming a 15-year life and 8% minimum rate of return. (Click here to view Present Value of Ordinary Annuity.)
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