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
Operating hours per day
Operating days per year
Metered utility rate per kilowatthour kwh
watts per hr
watts per hr
$
$
Note: A kilowatthour is equal to watts per hour.
a Determine the investment cost for replacing the fixtures.
$
b Determine the annual utility cost savings from employing the new energy solution.
$
c Should the proposal be accepted?
Evaluate the proposal using net present value, assuming a year life and minimum rate of return. Click here to view Present Value of Ordinary Annuity. $M
