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Airline Capital Budgeting
Published in Bijan Vasigh, Ken Fleming, Liam Mackay, Foundations of Airline Finance, 2018
Bijan Vasigh, Ken Fleming, Liam Mackay
Capital budgeting is the process of identifying, evaluating and using capital to invest in long-term assets or projects. Airlines must decide how to use capital in order to provide value for the company and its shareholders.2 For example, when Southwest Airlines replaces old aircraft with new and more fuel-efficient ones, the airline often reduces the operating costs associated with flying its new aircraft. In other words, capital budgeting is the process of identifying the best investment projects and the optimal allocation of resources. While in an ideal world any perceived profitable capital project should be undertaken, airlines are faced with financial constraints, so that the role of capital budgeting must include the rationing of capital.
Economics of Manufacturing
Published in Zainul Huda, Manufacturing, 2018
Capital budgeting involves activities of generating, evaluating, selecting, and following up the company's long-term capital investment projects that are worth the funding of cash through the firm's capitalization structure. Examples of capital budgeting projects include renovation of an existing manufacturing facility, expansion of a plant, research and development (R&D) projects, and the like. The evaluation criteria of a capital budgeting project include the minimum acceptable rate of return (MARR). The scope of this book does not permit a detailed account on capital budgeting; the reader is advised to refer elsewhere (Shapiro, 2004) for an in-depth discussion on this topic.
An offshore floating charging station for electric ships: accessibility enhancement schemes for recharging
Published in Ships and Offshore Structures, 2021
V. Sruthy, Bibin Raj, P. K. Preetha
Payback period is one of the many techniques used for implementation of capital budgeting and is defined as the time required for recovery of the cost of initial investment. Therefore, as a technique of capital budgeting, the payback period will be used henceforth to compare various projects and derive the number of years it takes to recover the initial investment. The project which recovers the cost in the minimum period is usually selected. The renewable energy-based FCS system proposed here is analysed for its payback period to get a rough estimate regarding the financial feasibility of the entire system. A brief theoretical estimate based on an average capacity of a 750 kW floating charging station with 315Wp solar panel sizing done with nearly 3024 solar panels and storage system with a daily energy requirement of 3 MWh. The cost considerations for the system are as follows: Cost for solar panels = Rs. 24,192,000/- (Rs. 8000/- per panel); Cost for Floating platform structure = Rs.1,960,200,000 (assuming Rs. 15,000/square-feet); Cost for storage elements = Rs. 42,432,000/- (assuming Rs.14,144/kWh); Cost for underwater cables, signalling equipment, controllers, etc. = Rs. 50,000,000/-; Miscellaneous cost = Rs. 10,000,000/-.
Technical, economic, and environmental analyses of CCHP systems with waste incineration power plant as prime mover
Published in Energy Sources, Part A: Recovery, Utilization, and Environmental Effects, 2021
Mahmood Chahartaghi, Naser Dahmardeh, Seyed Majid Hashemian, Rahmat Malek
By putting costs in Equations (34)–(41) of economic section, the results of the annual savings are illustrated in Figure 12. To calculate the annual net profit, the cost of buying each kilowatt-hour of cooling and heating capacities from the plant must be calculated. Then, the amount operating costs must be deducted from the annual profit to obtain the amount of annual net profit for the system. Figure 12 shows the annual net profit. As the annual net profit increases, the payback period becomes shorter accordingly. The net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used for capital budgeting to calculate the possibility of investment or to analyze the project. One of the main uses of NPV is to study engineering economics and to evaluate technical and economic justifications for projects. As can be seen in the figure, the amount of cash flow from the investment made in this project is the horizontal axis. Where the NPV becomes zero shows the internal return rate, which in this scheme the rate of return is at 20%, and it determines that the plan is economically justifiable. If the rate of return is less than 20%, then the plan is not economically justifiable.
Effectiveness of mineral waste management
Published in International Journal of Mining, Reclamation and Environment, 2018
Three aspects of waste minimisation can be examined: profitability of useful components recovery, management methods and profitability of investment expenditure. To evaluate the cost-effectiveness of waste management, Net Present Value (NPV) can be apply. It represents the difference between the present cash inflow and outflow. NPV is used in capital budgeting to analyse the profitability of the investment. A positive NPV indicates that the projected earnings generated by a project exceeds the anticipated costs. Another indicator is Earning Before Interest and Tax (EBIT), being an operating profit criterion. The formulas of EBIT and NPV can be found in publications on the economic assessment of industrial projects [14–17]. For the purposes of this work, the numerical values used for calculations of EBIT and NPV in the formulas regarding raw materials have been modified accordingly taking into account characteristics of the mineral waste. Four effectiveness models were analysed:cost-effectiveness of waste management in a current process technologically linked with mineral components recoverycost-effectiveness of waste management in current process without mineral components recoverycost-effectiveness of utilisation of waste in new products technologically linked with mineral components recoverycost-effectiveness of utilisation of waste for making new products, without mineral components recovery.