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PART I]: Project Total Points: 100 points Benet of Sustainability: Cost saving approach Marriott's environmental connnitments are aiming to further reduce energy and water consumption by 20%. To meet the goals, Marriott Marquis initiated a long~term project to reduce waste by 20%. (We here refer lhl maximum conversion rate, rm\". is 20%} Considerationsir cos: sachets 1. Annual cost 01' waste {or Marriott Morgue [gar hotel}: The following table is to illustrate Marriott Marquis's average monthly weights for recycling. trash, compost for recent years. All weights are marked in tons. Recycling and trash amounts are measured in 35- yard compactors. It costs $150 to haul a 35yard compactor plus $59 per tonnage. Compost amount is measured based on a 35-gal container. 22.5 containers are required for tonnage. It costs $6.66 per a recycled container with delivery costs of $59 per tonnage. The 35yard eompactor can be shared for recycling and trash. {Assume that recycling and trash 3c compost treatment process is implemented once a month.) Table: Marriott Marquis' weights for recycle, trash, and compost 95.52 88.51 19 2. Ected Cash Flows: Let's denote total annual cost savings (recycling. trash and compost) for Marriott Marquis asCs, discount rate as t', and maximum conversion rate is rm\" [Gamma Max) . Suppose annual conversion rate. rtGommo], is increasing linearly: each year over 10 years. That is, y = 01va in the rst year, 0.215..\" in the second year, ymax in the last (10m) year. The expected cash ow (CF) is CS x (ymax X I]. 1}!\"1 in the rst year, GS X {ymu x ll. 2} 1n the second year,- 35C x (vmm. x 1) in the last [10\" } year. 3. Discount rote: According to the effective yield of the Bank of America Merrill Lynch US Corporate 110 Year Index that compiles all securities with a remaining term to maturitj.r of greater than or equal to T 1years and less than it) years, lD-year corporate bond yield is 3.85%. 4. Typical prefect length: Many of Marriott's hotels have a form of committees or independent CSR work groups. Each work group has launched and is currently.r working on relevant projects as part of enhancing business sustainabilitjr with typical project lasting about 10 years. 5. Net Present Value [NP V3 and Internet Rate or Return (ERR; NPV determine the sum of the present values of cash inow and outows over the period of project. NPV calculate an estimate of the profitahilit}l of a project or investment. The fonnula can be written as i. NPV= cD++ _ _ C: (1+: )2 +" + (14-3311" _ C\" + 2': 1cm)? ii. if\"? finds r such as * CU + 2t- - D 1 (1+r}T where w (:0 is initial cost (investment), C 15 cash flow, :- is discount rate, and Tie time. The NPV method is a. direct measure of the dollar contribution to the investors, while the IRR method provides the return on the original money invested. NEW and [RR method can give a conicting ranking of projects when IRR method is compared to NPV for niutuall},r exclusive projects- Also multiple IRR problem can be an isaue when cash flows during; the project lifetime are negative. 20 Question for Project (Total llJO points) You are new asked to prepare for 2~3 page report (no more than 5 pages] for your boss. Based on your report, your boss will report on this project in the board meeting in a week. She is allocated only 2 minutes to speak for this agenda and your report will be distributed to board members whose average age is slightly over 60 years old. Thus, you need to consider the efciency and visibility when you Write your report (10 points}'. Your report is expected to include Q] 1 answers for the following 3 questions that your boss wants to know: Qli) What is the annual cost of waste for Marriott Marquis in recent years? {10 Points} 012} Suppose there is no initial investment (cost), l.J = t} {without any running cost). What is the maximum allowed annual investment, iv, for this project to have positive NPV? (29 Points) Ql3} Suppose there is initial investment (0031):, in, of $35,000 required. What is the maximum allowed annual investmcnlj iv, For this project to have positive NPV? (20 Points) Q2} Provide the nancial analysis for answers that you have derived in Question 1. (30 points) Q3) Provide your nal opinion (51. l paragraph length} as a project manager. (10 points} lFor example. I guess, well-written and condensed {s | page length} summary may help your boss and board member understand your message. 2 Note that the major cost item to deploy some effective ideas of sustainability in light of food waste and recycling are an initial investment concern to better help manage food waste. Incremental labo ' ' concern. 21 Criteria for Evaluation: 1} 2} 3} Accuracy (51} points) Are the numbers that you have provided to your boss is eorreet? (You should not lie when you report to your boss-) You will be asked to provide 3 numbers that your boss wants to know {SI} points=l points*lquesion+2ll points*2 questions). Up to 5~10% differences on your estimation will be allowed to get the full credit. Logic {30 points) Do you use a reasonable nancial analysis method in a right way? (It) points) . Do you use a valid discount rate? (10 points) Do you use reasonably estimated the cash flows? (1 0 points} Communication (20 points) Fina] opinion paragraph: Based on your analysis, do you make a reasonable decision? Is it persuasive? (10 points} . Report F ormat: Are you an efcient communicator? (10 points) 22