Case Study 2IKEA is considering converting its all Australianstores into eco stores by installing solar system.The goal is to generate its own electricity withexcess electricity to be sold to Origin Energy. Thequotation received from various solar companiesshowed that in the initial phase, the generatedelectricity would be just enough to meet thedemands of stores with no excess capacity. Thesystem will improve the carbon foot printing of thecompany and will reduce the cost of Carbon tradingunder Carbon emission trading scheme which isdone every two years. The operating characteristicsare as follows:Initial outlay for new equipment 20-year life no residual$ 1887,645valueAnnual operating cost over 20-year life$ 67, 99410% p.a.$ 995, 987$ 8900DepreciationSavings in electricity due to own generationTotal cost of cleaning and maintaining the system every5 years1. Calculate summary of the total cost of solarsystem for next 20 years2. Should IKEA invest in this new system evenif it is uneconomic

Step 1 Before taking up any project the company should see all the inflows and outflows related to…

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Business

Accounting

tr he ear

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter14: The Balanced Scorecard And Corporate Social Responsibility

Section: Chapter Questions

Problem 1MAD: Den-Tex Company is evaluating a proposal to replace its HID (high intensity discharge) lighting with...

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