F#15

A living roof is a roof of a building that is completely covered with grass or other vegetation planted over a waterproof layer (to protect the building interior). The Ford Motor Company's Rouge Plant in Dearborn, Michigan, is an example of a successful implementation of a living roof.

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(Click the icon to view the benefits of a living roof.)

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(Click the icon to view information on a long-lasting roof.)

The other roofing alternative is a living roof.

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(Click the icon to view information on the living roof.)

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Read the requirements.

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Requirement 1. Calculate the present value of the composite roof. (Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a net cash outflow.)

The present value of the composite roof is

.

Requirement 2. Calculate the present value of the living roof. (Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a net cash outflow.)

The present value of the living roof is

.

Requirement 3. From a purely quantitative standpoint, which roof would you recommend?

From a purely quantitative standpoint, the

composite roof

living roof

should be recommended.

Requirement 4. Are there qualitative factors to consider in this decision? What other factors besides financial should be considered in this situation?

A.

There are qualitative factors to consider in this decision such the useful life of each roof.

B.

There are qualitative factors to consider in this decision such as the benefits associated with a living roof because these benefits have a positive impact on the environment.

C.

Only quantitative factors need to be considered in this decision.

D.

There are qualitative factors to consider in this decision such as the cost of each roof.

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There are several benefits associated with a living roof including the following:

1.	Reduce heating and cooling costs for the building.
2.	Reduce stormwater runoff.
3.	Filter pollution out of air and water.
4.	Help to insulate building for sound.
5.	Create a habitat for various wildlife.
6.	Increase life of roof (as compared to a typical traditional roof).

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Best Advice

Consultants, Inc., is investigating whether it should replace its current roof with a long-lasting composite roof or a living roof. A long-lasting composite roof would cost the company

$1,300,000

and would last approximately

30

years. The annual maintenance costs on this composite roof would be approximately

$13,000

per year. At the end of its useful life of

30

years, various components of the composite roof could be recycled and sold for

$85,000.

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Dialog content startsThe costs associated with constructing the living roof total

$1,550,000

and include the following: vegetation

$300,000,

waterproof membrane

$95,000,

growing medium (dirt)

$180,000,

living roof expert consultant fee

$5,000,

construction costs

$675,000,

and other miscellaneous fees

$295,000.

Maintenance on the living roof is estimated to be

$58,000

per year. Management estimates that this living roof will last for

30

years. The following savings should result from the living roof:

Heating and cooling costs will be reduced by

$40,000

per year

Stormwater treatment costs will be reduced by

$10,000

per year

Filtering system costs will be reduced by

$9,000

per yearThe living roof would have no recyclable components to be sold at the end of its life. The company uses

a

10%

discount rate in evaluating capital investments.Dialog content ends

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