This Assessment requires submission of one 8- to 10-page report (excluding title page and references) as well as an accompanying Excel file for the financial performance analysis.
SCENARIO:
You have been hired by a midsize copper smelting company in northern Canada to act as a consultant to help the executive team to determine its best course of action on a major decision. Due to some recent changes to the local environmental air quality laws, the company’s large coal-fueled smelting furnace is now operating out of compliance due to high levels of pollutants in the exhaust gases. The regulatory agency has given the company 12 months to demonstrate compliance, after which it will be fined a $1,000 per day until the operations meets the regulation. The company has two alternatives. The first alternative is to install air-scrubbers to reduce the output pollutant levels. The second alternative is to convert the smelting furnace from coal to natural gas. Both alternatives will meet the current regulatory requirements, but there is a slight concern that the air-scrubber solution may not meet future regulatory restrictions. The executive team wants you to perform a financial performance analysis on both alternatives using several different capital budgeting methodologies. The team also is seeking guidance on non-financial considerations regarding the company’s ethical and social responsibilities related to this decision.
The product of your financial performance analysis will be a report for the executive team.
Instructions/Prompts:
A. PART ONE: The Financial Performance Analysis (1-2 pages, plus Excel template).
For the first part of your report, you will provide an analysis of the financial performance of both alternatives using net present value (NPV), accounting rate of return (ARR), internal rate of return (IRR), and payback. (Note: ARR is also called Return on Investment, or ROI.) Your SME will provide you with the following financial information to use for this part of the Assessment, which will include the numerical values to replace the variables (i.e., “X”):
Air Scrubbers
Furnace Fuel Change
Required Investment
$X
$X
Annual Cash Flows
X
X
Annual Net Income
X
X
Project Life
15 years
15 years
Average Book Value
X
X
Cost of Capital
X%
X%
To complete this part, address the following:
Using the AM003 Financial Performance Analysis Template, calculate the NPV, payback, IRR, and ARR. (PLEASE BE DETAILED AND SHOW HOW YOU GOT TO YOUR ANSWER).
Note: In addition to submitting your work in Excel, include your calculations within your report by copying and pasting the information from Excel. For information on inserting data from Excel into Word, refer to the following:
Microsoft. (n.d.). Insert a chart from an Excel spreadsheet into Word. https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheet-into-word-0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1
Analyze each of the alternatives based on your calculations and illustrate to the executive team which alternative should yield the highest return.
*** I have attached both excel templates; the one sent from my professor with the information needed to solve the equations, and the actual template needed to complete the work. ***
B. PART TWO: Ethical Responsibility (3-4 pages)
During several visits to the plant, you have overheard some employees and mid-level supervisors discussing the issues related to the smelting furnace and some potential “solutions” to the current regulatory problem. Some of these conversations are troubling because they are suggesting covering up the issue through false or misleading data reporting. Based on these conversations, you feel obligated to discuss the issue of ethical responsibility with the executive team. Be sure to address the following:
Examine the importance of ethics in managerial accounting.
Analyze how ethics, both good and bad, can affect the organization as a whole. Consider not only the financial impact, but also the direct and indirect impact on stakeholders, such as employees, customers, suppliers, etc.
Propose at least two recommendations that the company could implement to help ensure high ethical responsibility at all levels of the organization.
PART THREE: The Triple Bottom Line and Positive Social Change (3-4 pages)
For this part of your report, you will explore aspects of the triple bottom line and positive social change that the company should consider when choosing an investment. In addition to the financial information provided, your client wants to be sure that the investment is working toward the greater good for its stakeholders. You will provide that information by showing them, through the triple bottom line, that the company can capture profits and demonstrate protection to people and the planet. You will also show the executive team how this concept can lead to having its decision promote the good of all people through positive social change. To complete this part, address the following:
Define the triple bottom line and analyze its importance within an organization. Give examples of how the organization might address each of the three P’s.
Illustrate how the triple bottom line can lead an organization to have an influence on positive social change. Provide at least two examples of how this can be accomplished.
As part of your discussion with the executive team on the triple bottom line and its potential impact on positive social change, you believe it is important to emphasize the need for the leaders to ask the right questions to ensure effective implementation of the triple bottom line. To help demonstrate the effectiveness of questioning as a means of leading change, propose three to five questions that the executive team members should ask their staff to prompt both a learning mindset and lead to improved collaboration within their organization. Be sure to provide your reasons for choosing these questions and substantiate your position.
PART FOUR: Executive Summary (page 1 of the report)
Provide the leadership team with an executive summary of your findings and recommendations. This will serve as the first page of your report. Be sure to address the following in your executive summary:
Clearly identify the purpose of the report.
Concisely summarize your analysis and recommendations for the organization’s leaders related to the financial and non-financial considerations that could impact their stakeholders, their bottom line, and their ability to effect positive social change.
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Please note that the outline and excel calculations are due first, to get feedback from the Professor. Once the feedback is received, the report can be submitted.
I have attached the rubric, two excel spreadsheets, and supporting materials.
Thank you in advance for your help with my assignment! 🙂
