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Analyze a CSR capital investment proposal for Ganon Inc. Ganon Inc. is evaluating a...

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Accounting

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 kilowatt-hour (kwh)*
500 watts per hr.
300 watts per hr.
800
$300
10
300
$0.12
*Note: A kilowatt-hour is equal to 1,000 watts per hour.
a. Determine the investment cost for replacing the 800 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 15-year life and 8% minimum rate of return. (Click here to view Present Value of Ordinary Annuity.) $M
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