Investment decisions

Total Capital Cost The installed cost of the fixed-capital investment Cpc is obviously an essential item which must be forecast before an investment decision can be made. It forms pai4 of the total capital investment Cfc, defined by Eq. (9-14). The fixed-capital investment is usually regarded as the capital needed to provide all the depreciable facihties. It is sometimes divided into two classes by defining battery limits and auxiliaiy facilities for the project. The boundary for batteiy limits includes all manufacturing equipment but excludes administrative offices, storage areas, utihties, and other essential and nonessential auxihaiy facilities. 

Life cycle cost (LCC) calculations are made to make sure that both the purchase price and the operating costs for life cycle are considered in investment decisions. In the chapter the basic calculation methods and sensitivity analysis are introduced. Examples of calculation results and references to LCC information sources are given. 

The aim of life cycle cost calculations is to ensure that investment decisions are not made solely on the basis of a low purchase price, but that the life cycle operating costs are considered in the equation. 

See also Biofuels Capital Investment Decisions Hydrogen Kinetic Energy, Historical Evolution of the Use of Methanol Natural Gas, Processing and Conversion of. 

Capital investment decisions are best made within the context of a life-cycle cost analysis. Life-cycle cost analysis focuses on the costs incurred over the life of the investment, assuming only candidate investments are considered that meet minimally acceptable performance standards in terms of the non-inonetary impacts of the investment. Using life-cycle analysis, the capital investment decision takes into account not just the initial acquisition or purchase cost, but maintenance, energy use, the expected life of the investment, and the opportunity cost of capital. When revenue considerations are prominent, an alternative method of analysis such as net benefit or net present value may be preferred. 

Sp ecial cases of capital investment decisions include lease or buy decisions, when-to-replace decisions, which design to choose, and comparison of alternatives with unequal service lives. These special cases are covered in Park (1997) and in Ruegg and Marshall (1990), as are the other methods for capital investment decisions. 

The increased availability of energy fueled the Industrial Revolution. The United States became the world s largest oil producer, and the new fossil fuels were abundant and modestly priced. A technology s energy efficiency was not a key part of capital investment decisions. Energy-efficient technology as a priority ranked well behind improved performance. 

Even when the time comes to make a purchasing decision, an energy-efficient motor purchase is not a certainty. Sometimes an energy-efficient motor will be the economically efficient choice at other times, not. The capital investment decision is based on the cost in relation to performance, efficiency and reliability. Moreover, the decision depends on the application and the amount of time the motor is in operation. It can be the major component of a product (drill or mixer), or a minor component (computer disk drive) it can be the major component cost of a product (fan), or it can be a minor component cost (stereo tape deck) it can run almost constantly (fan, pump, and machinery), or only a few minutes a day (vacuums and power tools). For example, contractors purchase circular saws almost solely based on performance and reliability. Time is money, and since the saw is operating only a few minutes a day and the contractor is often not responsible for the electricity costs to run the motor, energy efficiency is not a consideration performance and reliability are what matter most. On the other hand, an industrial user, who runs huge electric motors twenty-four hours a day to work pumps, machinery, and ventilation equipment, is very concerned tvitli energy efficiency as well as performance and reliability. 

See also Batteries Capital Investment Decisions Consumption Economically Efficient Energy Choices Electricity Electric Power, Generation of Faraday, Michael Fuel Cells Fuel Cell Vehicles Magnetism and Magnets Oersted, Hans Christian Tesla, Nikola. 

See also Appliances Behavior Capital Investment Decisions Demand-Side Management Efficiency of Energy Use, Economic Concerns and Efficiency of Energy Use, Labeling of Environmental... 

See also Auditing of Energy Use Capital Investment Decisions Economically Efficient Energy Choices Energy Economics Industiy and Business, Productivity and Energy Efficiency in. 

University of Illinois, Chicago Capital Investment Decisions... 

Appraisal wells, drilled at the exploration stage within structures or other traps with an observed oil and gas content for the purpose of studying the geological structure of the deposit and the quality of the mineral to the extent necessary to permit confirmation of oil and natural gas reserves in categories which will serve as a basis for investment decisions, as well as obtaining data required for developing and exploiting the deposit. 

Making major investment decisions in the face of the uncertainties that will undoubtedly exist about plant performance, costs, the market, government policy, and the world economic situation, is a difficult and complex task (if not an impossible task) and in a large design organisation the evaluation would be done by a specialist group. 

Having developed estimates of benefits as well as costs, these values must be compared. Since costs and benefits are not necessarily experienced in the same time frames, the same financial analysis methods used by the firm to make its other capital investment decisions must be used to justify the LIMS acquisition. The LIMS which is desirable from the technical and operational viewpoint can then be shown to be a truly beneficial capital investment and not just another corporate overhead expense. 

In the considered case study the simulation results had significant impact on investment decisions within the tank farm and on the agreements negotiated with the service partners responsible for the external buffers. 

Global models target to support strategic invest decisions and consequently follow also the requirements of value planning to have actual costs and turnover as decision basis as it is done in classical investment calculation including taxes... 

Capitalists in Department 2 use this multiplier to anticipate how much consumption goods they need to produce in order to respond to the investment decisions of Department 1. Hartwig (2004) provides a particular interpretation of the methodology employed by Keynes, in which entrepreneurs use the multiplier to plan their outputs at the start of each production period. A key advantage of this multiplier, in comparison to a one-good Keynesian model, is that it embodies the requirement of proportionality between departments of production. 

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