Financing options
The company can purchase the solar-powered trash compacter bun either by the raise the funds through the issue of the equity shares of the company or by taking the bank finance from the banks or the financial institutions (Balaban, Župljanin, and Ivanovi?, 2016).
Raising funds through the issue of the equity shares is regarded as the permanent funding since generally in the future it is not required to repay the amount. Further by issuing the equity share, the company can get the advantage of reducing the debt of the firm (Gorton, and Winton, 2017). Moreover, there is no obligation to pay the interest and the principal amount; the company is required to pay only the dividend declared by the company in its annual general meeting to the shareholders. Apart from the above obtaining the funds by issuing the shares is the flexible process as the company can decide the number of issue of the shares, price as per the requirement of the funds for the company (Vismara, 2016). However, through the issue, the control over the company will be diluted as the new investor by purchasing the share of the company can exercise the control over the company.
On the other hand, for purchasing the compactor bin company can take the funds from the banks after keeping any security to the bank. In this situation, the company is required to the pay the interest and the principal amount in a timely manner. The Company can avail the tax benefit on the payment of interest paid to the banks. Further, the bank finance does not dilute any control over the company. Therefore, the control remains only with the existing shareholders of the company. However it may be possible that bank can put some compliance with the company, then it will be necessary for the company to follow all the compliance according to the terms of the bank.
On the basis of the above evaluation raising funds through the bank loan will be a more proper source of finance for the Australian Property Management company, due to the growth and the size of the company. The company can get the tax benefit advantage on the payment of the interest to the bank. Along with this, the control will remain to the existing shareholders of the company.
By considering the landfill cost $ 182.95 per ton and the service cost of $ 225.54 per bin, it has been assumed that the total initial cost for purchasing the solar compactor trash bin for the company will be $ 50 Million.
Annual maintenance requirement and the cost of the solar-powered trash compactor bin
For maintaining the quality of the solar-powered trash compactor bin, it is required to invest some amount for the maintenance by the company. The company is required to upgrade the software time to time which is attached with the compactor bin (Price schedule, 2018). It has been assumed that the ongoing maintenance cost per year for the company will be the 5% of the original cost of the company that is $ 2.5 million per year.
By purchasing the solar-powered trash compactor bin the asset liabilities and the profits of the company will be getting impacted. Operational budget of the company in the current year will be impacted by increasing the non-cash expenses such as the amount of depreciation charged on the compactor bin along with the cash expenses such as the interest amount paid to the bank for financing the compactor bin. However, the earlier operational expenses on the compactor bin also reduced by the company. Therefore the benefit from reducing the operational expenses also reflect the operational budget of the company. Further in the next year, the expenses related with the depreciation and the interest will be the same as in the previous year, however, due to the experience from the uses of the compactor bin, the effectiveness of the company increases, which will provide the more beneficial as compared to the earlier year, this will lead to the good impact on the operational budget.
The profit and loss account, balance sheet and the cash flow statement would be affected by the purchasing of the solar-powered trash compactor bin. In the profit and loss account, the expenses of the company will increase by the amount of depreciation charged on the compactor bin and the payment of the interest to the bank on availing the loan for purchasing the compactor bin. Further, in the balance sheet, the amount of the fixed asset will be increased by the purchase cost of the compactor bin, in this purchase cost all cost associated with the purchase also included. The liabilities will be increased by the amount of the loan taken from the bank. This liability will form part of the non-current liability of the company. Apart from the above in the cash flow statement, the proceeds from borrowing the money from the bank will get an increase. Further, the amount of purchasing the equipment will be deducted from the investing activities of the cash flow statement.
Payback period and the net present value
Payback period= investment required/net annual cash inflow
In this case, the amount of the investment required is $ 50 M., and the saving will be the 15% of the purchase price over the five years that is $ 7.5 M. Therefore, the payback period will be 50/7.5= 6.66 years.
Net present value can be calculated by deducting the present value of the annual cash flow from the initial purchase price of the compactor bin.
The discounted rate for calculating the present value of the annual cash flow assumed 10%
|
year |
annual inflow ( $M) |
present value factor 10% |
present value |
|
1 |
7.5 |
0.909 |
6.8175 |
|
2 |
7.5 |
0.826 |
6.195 |
|
3 |
7.5 |
0.751 |
5.6325 |
|
4 |
7.5 |
0.683 |
5.1225 |
|
5 |
7.5 |
0.62 |
4.65 |
|
total present value |
28.4175 |
Initial investment $ 50 M
Net present value= -21.8525 from (-50+28.4175)
Solar powered trash compactor bin is the device which is connected with the network and enable to working with the other connected devices also. This compactor bin is attached with the waste compactor bin, which is used for the storage of the waste of the garbage, metal, plastic etc. for the short span of the time (Ravi, and Charanthimath, 2018). The solar-powered trash compactor bin connected with the waste compactor bin able to identify the fill level of the waste compactor bin and can give the symbol of the stop level of waste compactor bin on the real-time basis. Along with this, the solar-powered compactor bin also engages in the process of reducing the size of the waste through the compressing the waste, by which the more waste can be stored in the compactor bin. The waste is compacted in a more comprehensive manner by which the air level within the bin minimized to a great extent.
It is very beneficial for the people who throughout the garbage and also for the companies who are engaging in collecting the waste. The solar-powered trash compactor bin is accessible for residential use as well as the commercial use by the industries (Alsbou & et al., 2018). Further, the solar-powered trash compactor bin also enhances the size of the waste compactor bin by five to eight times. In this system, the compacter bin operated by the battery, which is charged through the solar energy and the battery also preserve the energy for the future use of near about the three to four weeks. This preservation capacity depends on the regularity of the compaction and the manner of the use of the compactor bins.
What the operation of the solar-powered trash compactor bin is depended connected with the remote software platform through the wireless network. The persons connected with the waste management can obtain the actual data analysis and issues related with the compactor bin. These type of the compactor bin generally implemented in the residential buildings, commercial buildings, supermarkets, beaches and etc.
The solar-powered trash bins enable for decreasing the removal of the waste collection. Along with this, this type of compactor bin also enhances the cleanliness by storing the garbage in the proper manner at the building or at the public space (Suez offerings, 2018). Further by implementing this type of compactor bin, harmful disease related to the waste product can also be reduced to a significant level. Moreover, it also enables the company to analyze the data from the waste collection, because the software connected with the bin can provide all the related data. The main and the important benefit from installing the solar-powered trash compactor bin is to improve the environment by reducing the greenhouse gas emission. Further, the operational cost associated with the waste can also be reduced to the great extent by the solar-powered trash compactor bin. Overflow problem of the waste from the compactor bin also eliminated by the solar-powered compactor bin.
Therefore the Australian Property management by using the solar-powered trash compactor bin as a part of the plant and machinery can obtain the major benefit of the reduction in the cost. Along with it also helps the company for managing the waste generated from the construction activity in a proper and effective manner.
References
Alsbou, N., Samad, M.A., Alhashem, M. and Abuabed, A.S., 2018, June. Developing a Self-Powered Enlarging Smart Waste Bin. In 2018 14th International Wireless Communications & Mobile Computing Conference (IWCMC)(pp. 683-689). IEEE.
Balaban, M., Župljanin, S. and Ivanovi?, P., 2016. Sources of Finance for Entrepreneurship Development. Economic Analysis, 49(1-2), pp.48-58.
Gorton, G. and Winton, A., 2017. Liquidity provision, bank capital, and the macroeconomy. Journal of Money, Credit and Banking, 49(1), pp.5-37.
Price schedule, 2018. Available through < https://www.contractswa.finance.wa.gov.au/…/CUAWAS2016_-_Price_Schedule.xlsx >. [Accessed on 5th October 2018].
Ravi, S.M. and Charanthimath, S.G., 2018. Design and Fabrication of Solar Powered Waste Management System. International Journal on Recent and Innovation Trends in Computing and Communication, 6(5), pp.302-311.
Suez offerings, 2018. [Online]. Available through <https://www.suez.com.au/en-AU/our-offering/businesses/how-can-we-help-you/waste-management/equipment>. [Accessed on 5th October 2018].
Vismara, S., 2016. Equity retention and social network theory in equity crowdfunding. Small Business Economics, 46(4), pp.579-590.
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