Analysis

BTB Company has recently acquired property named Vintage Courts, as after its renovation, it will be a great source of revenue and a perfect location for student housing. Its maintenance and investment will make it a remarkable place. Therefore, companyhave some potential projects available which will add value to its acquiring property.

Existing toilets, shower heads and faucets are using high flow rate. However, by installing new equipment, the flow rate of flush rate would decline to 1.6 gal/flush, shower heads flow rate would decline to 1.5 gal/min and faucet aerators flow are is expected to decline to 1 gal/min.

Energy star dishwasher will be able to reduce utility cos of buildings. However, ths new equipment will able to save voltage and gal/wash. Moreover, company is able to get 45% discount on purchase of dishwashers’ in bulk. Therefore, company will be purchasing type B model for the Vintage courts. As it will use lesser voltage and consume less gallons.

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Traditional incandescent bulbs are installed in the property, as it is of less cost, but it also holds lesser bulb life. In order to save electricity and add life to bulb, company is planning to install Compact Fluorescent Bulbs, which cost $2.5 per bulb but have a life of 10,000 hours. Moreover, supplier will give 55% of purchase discount. However, this bulb will require $20/hour maintenance staff member.

As Texas is a hot state, and requires higher amount of air condition hours, it is analyze that company will replace existing air conditions from the new one, which have an average ratings of 13 BTU/Wh. Installation cost of each unit will be $915. The air conditioning usage time is approximately equal to the hours, when temperature s greater than 75 degree Fahrenheit. According to climate website, there are 1900 hours when temperature is greater.

Company is planning to install programmable thermostats for heating purpose, as it will reduce the heating energy requirement by 10%. It will cost $126 with 50% rebate. In addition, if the furnace is installed, it will cost $20,000 more with $300 per apartment rebate. However, thermostats, without furnace, can also be installed.

BTB have above potential projects that will add value to Vintage Courts that will increase its property and its income through rent. Moreover, it will also add value in providing lasting and positive impacts on environment.

Financial analysis:

The only inflows of this property is the revenue that is earned through renting bedrooms to different students (Exhibit 1), is increasing 20% every year. Moreover, each unit has its own no of bedroom, which is the reason of its increasing revenue.

The outflows includes all the expenses that is incurred as potential projects such as electricity, gas, flush toilets, dishwasher, bulbs, air conditions, heating systems and maintenance cost. These outflows and expenses are increasing yearly as there is a price escalation incurred each year.

Subtracting inflows from outflows, operating profit is determined. However, company is facing negative profit in first year. But as revenue is increasing each year, operating profit is also increasing and resulting in positively. Subtracting tax expense from operating profit, net profit is obtained, however, net profit is also resulting negatively in first year, but as year’s passes, and the increase in revenue, net profit is also responding positively.,............................

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