BBA321
Cases in finance
Task brief & rubrics
FINAL ASSIGNMENT (100% of the final grade)
You must answer all the questions in the proposed business case.
LAUNCH: WEEK 5 / DELIVERY: 20 SEPTEMBER, 2020, 23:59HRS ON MOODLE
Submission file format: Excel document with all the answers, clearly identifying all four projects and showing the present values of the cash flows as well as
explanations when needed. Clearly provide all the assumptions which you take to solve this case.
For this Final Assignment (individual), the students must carry out the following work:
Read the case “Ligthing the Way at the Manor House Hotel”, and calculate the present value among the four types of bulbs. Determine which bulb
you would choose and why.
The structure of the work will be built around the following elements:
1. Excel table showing the calculation of the present values of the four alternatives as well as the assumptions taken (20 pts each = total 80 points)
2. Summary of the present values and choice of the bulb (20 pts)
Show all your calculation.
Be precise and provide numbers to support your analysis.
Create a specific tab in your Excel file with only the final answers (i.e. the four present values and the bulb chosen)
Please see EUBS’s recommendations for avoiding plagiarism, located in the BBA Student Guidelines.
Rubrics
9-10
8-8.9
7-7.9
6-6.9
3-5.9
1-2.9
0
Descriptor
Student demonstrates excellent understanding of key concepts and
uses vocabulary in an entirely appropriate manner.
Student demonstrates good understanding of the task and mentions
some relevant concepts and demonstrates use of the relevant
vocabulary.
Student understands the task and provides minimum theory and/or
some use of vocabulary.
Student understands the task and attempts to answer the question
but does not mention key concepts or uses minimum amount of
relevant vocabulary.
The student demonstrates insufficient understanding of the concepts.
They may mention some relevant ideas or concepts, although it is
clear that the relationship between them is not understood by the
student.
The student demonstrates insufficient understanding of the concepts
and does not mention any relevant ideas or concepts.
The student leaves the question blank or cheats.
Summary of Bulb Choices
Options:
Philips 60 Watt Equivalent Incandescent
Philips 60 Watt Equivalent Twister CFL
Philips 60 Watt Equivalent LED 19A
Cree 60 Watt Equivalent LED
Present Value:
75,197
16,289
19,116
16,367
Choice
number
4
1
3
2
Finance Case Study
Philips 60 Watt Equivalent Incandescent
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Year
Electricity Cost Cost of new bulbs Replacement Cost
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Present Value over 24 year period
5,256
267
0
5,361
272
1,863.03
5,468
277
1,900.29
5,577
283
1,938.30
5,689
288
1,977.06
5,803
294
2,016.60
5,919
300
2,056.94
6,037
306
2,098.07
6,158
312
2,140.04
6,281
318
2,182.84
6,407
325
2,226.49
6,535
331
2,271.02
6,665
338
2,316.44
6,799
345
2,362.77
6,935
352
2,410.03
7,073
359
2,458.23
7,215
366
2,507.39
7,359
373
2,557.54
7,506
381
2,608.69
7,656
388
2,660.87
7,810
396
2,714.08
7,966
404
2,768.36
8,125
412
2,823.73
8,288
420
2,880.21
nt Incandescent
Philips 60 Watt Equi
Total Annual CF Discounted CF
iod
5,522
7,496
7,646
7,798
7,954
8,113
8,276
8,441
8,610
8,782
8,958
9,137
9,320
9,506
9,696
9,890
10,088
10,290
10,496
10,706
10,920
11,138
11,361
11,588
$75,197
5,020
6,195
5,744
5,326
4,939
4,580
4,247
3,938
3,652
3,386
3,140
2,911
2,700
2,503
2,321
2,152
1,996
1,851
1,716
1,591
1,476
1,368
1,269
1,176
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Electricity Cost
Present Value over 24 year
1,139
1,161
1,185
1,208
1,233
1,257
1,282
1,308
1,334
1,361
1,388
1,416
1,444
1,473
1,503
1,533
1,563
1,594
1,626
1,659
1,692
1,726
1,760
1,796
Philips 60 Watt Equivalent Twister CFL
Cost of new bulbs
Replacement Cost
Total Annual CF Discounted CF
Every 12 years
Present Value over 24 year period
2,906
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,685
2,316.44
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4,044
1,161
1,185
1,208
1,233
1,257
1,282
1,308
1,334
1,361
1,388
1,416
7,445
1,473
1,503
1,533
1,563
1,594
1,626
1,659
1,692
1,726
1,760
1,796
$16,289
3,677
960
890
825
765
710
658
610
566
525
487
451
2,157
388
360
334
309
287
266
247
229
212
197
182
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Philips 60 Watt Equivalent LED 19A
Period Year Electricity Cost
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Cost of Replacement Cost
Total Annual CF
new bulbs Every 24 years
Present Value over 24 year period
1,095
8,431
0
1,117
0
0
1,139
0
0
1,162
0
0
1,185
0
0
1,209
0
0
1,233
0
0
1,258
0
0
1,283
0
0
1,309
0
0
1,335
0
0
1,361
0
0
1,389
0
0
1,416
0
0
1,445
0
0
1,474
0
0
1,503
0
0
1,533
0
0
1,564
0
0
1,595
0
0
1,627
0
0
1,660
0
0
1,693
0
0
1,727
0
0
9,525
1,117
1,139
1,162
1,185
1,209
1,233
1,258
1,283
1,309
1,335
1,361
1,389
1,416
1,445
1,474
1,503
1,533
1,564
1,595
1,627
1,660
1,693
1,727
19A
Cree 60 Watt Equivalent LED
Discounted CF
$19,116
8,659
923
856
794
736
682
633
587
544
504
468
434
402
373
346
321
297
276
256
237
220
204
189
175
Period Year Electricity Cost
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Cost of
new bulbs
Present Value over 24 year period
832
8,431
849
0
866
0
883
0
901
0
919
0
937
0
956
0
975
0
994
0
1,014
0
1,035
0
1,055
0
1,076
0
1,098
0
1,120
0
1,142
0
1,165
0
1,189
0
1,212
0
1,237
0
1,261
0
1,286
0
1,312
0
Cree 60 Watt Equivalent LED
Replacement Cost
Total Annual CF Discounted CF
Every 24 years
ent Value over 24 year period
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9,263
849
866
883
901
919
937
956
975
994
1,014
1,035
1,055
1,076
1,098
1,120
1,142
1,165
1,189
1,212
1,237
1,261
1,286
1,312
$16,367
8,421
701
650
603
559
519
481
446
413
383
356
330
306
283
263
244
226
210
194
180
167
155
144
133
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Light Bulb Specifications
Cost Per Bulb
Rated Lifetime (hours)
Annual Hours
Initial Quantity of Bulbs needed
Wattage
Annual Cost of electricity
Bulb Replacement Labor Cost
Inflation
Cost per Kwh (US cents)
Philips 60 Watt Philips 60 Watt
Equivalent
Equivalent
Incandescent
Twister CFL
$0.41
1,000
650,000
650
60.0
5,256
$2.81
$4.47
12,000
650,000
650
13.0
1,139
$2.81
2%
ROR
Energy Cost Calculation
13.476
Philips 60 Watt
Equivalent LED
19A
$12.97
24,000
650,000
650
12.5
1,095
$2.81
10%
Cree 60 Watt
Equivalent
LED
$12.97
24,000
650,000
650
9.5
832
$2.81
Assumptions
Assumptions taken for solving this case
Decrease in cost per LED bulb till 2015
Decrease in cost per LED bulb till 2020
Permanent one-time hike in electricity cost
Annual increase in cost per incandescent bulb till 2020
Annual increase in replacement labor cost for incandescent bulbs
Annual increase in electricity cost per KWH
Annual increase in cost per CFL bulb till 2020
Page 11
25%
12.50%
20%
2%
2%
2%
2%
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