A local university has acquired a historical mansion that requires retrofits to improve its energy efficiency. This home was built between 1912 and 1913 by William Magrath. The building is a two-and-one-half-story building on Ada Boulevard.

The capital budget for this year is $75,000. Two projects have already been approved using $55,000 of this budget. There are two proposals competing for the remaining $20,000.

The first proposal is it install solar panels on the roof to reduce electrical costs and to improve energy efficiency. They are hiring specialists to ensure that this will not change the look of the building. The roof is quite high, and panels can be installed so they are not noticeable. The cost of this investment would be $15,000 for a 6kW system. A federal grant is available for $3,000; however, it will not be received until the following year. The net savings per year in energy costs would be $1,300 per year and the useful life 20 years.

The second proposal is to install a new high-efficiency furnace and heat pump for $17,000. There is a combined city and federal grant available for this amounting to $6,000 that will be received one year after installation. The annual savings with this project will be $1,287 and the useful life is 15 years.

The required rate of return for both projects is 8.25%. The taxation rate is 20% for this university. There is an investment tax credit for solar panels of 22% in 2023. The CCA rate is 30% for both projects.

Given that this is a historical building there is an emphasis on maintaining the character of the home. This should be considered in selecting an alternative.

My proposal

After evaluating the two proposals, I propose a third alternative that can improve energy efficiency while maintaining the historical character of the building. My proposal is to install energy-efficient lighting and HVAC controls. This can be achieved by upgrading the current lighting and HVAC systems with energy-efficient technologies, such as LED lights and smart thermostats, and installing occupancy sensors to turn off lights and adjust temperature settings when the rooms are unoccupied. The cost of this proposal would be approximately $10,000, which is less than the cost of the two proposals that have been presented. However, the annual savings in energy costs would be significant. According to the Department of Energy, lighting accounts for about 10% of energy use in commercial buildings, and HVAC systems account for about 40% of energy use. Upgrading to energy-efficient lighting and HVAC controls can result in energy savings of up to 30%. Assuming a conservative estimate of 20% energy savings per year, the net savings per year would be approximately $800. The useful life of the upgrades is estimated to be 10 years. Therefore, the total net savings over the life of the upgrades would be $8,000. One of the advantages of this proposal is that it is relatively low cost compared to the other proposals. Another advantage is that it can significantly reduce energy consumption and costs without changing the appearance of the building. Additionally, energy-efficient lighting and HVAC controls can improve the comfort and productivity of occupants, which can be beneficial for the university. However, one potential disadvantage is that the energy savings may not be as significant as those of the other proposals. Additionally, the installation of smart controls may require additional wiring and other infrastructure, which could increase the upfront cost of the proposal.

Can you solve the excel sheets for three of the proposals which include 1. Average Accounting Return (AAR) 2. Payback Period (PP) 3. Discounted Payback Period (DPP) 4. Net Present Value (NPV) 5. Internal Rate of Return (IRR) 6. Profitability Index (PI), also are there any investment tax credits or grants available for this? What is the CCA taxation pool and percentage for this project? I want excel sheet with formulas you have used step by step explanation.