Maximum Energy Conversion and Revenue Management Paper

Running head: MAXIMUM ENERGY CONVERSION AND REVENUE MANAGEMENT 1
Maximum Energy Conversion and Revenue Management Paper
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MAXIMUM ENERGY CONVERSION AND REVENUE MANAGEMENT
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Maximum Energy Conversion and Revenue Management
Hydro Case Study
Question1
Yes, they should adopt wind power because it will result in a maximum energy conversion factor
(CF) of between 60 and 70 percentage per turbine. This is an acceptable CF level given that all
electricity generation process results in the loss of energy. Moreover, the company should expect
the Utsira site project to generate revenue of between $2.66 million and $3.1 million per turbine.
Question 2
The cost of the large-scale turbine is $2.6 million
We already know that at a CF of 70% were are able to generate revenue of $3.1 million
In order to get the break-even point where cost=revenue
We will use proportionality relationships to calculate which CF percentage will yield revenue of
$2.6 million
Therefore:
70%=$3.1 million
x%=$2.6 million
X =70 %∗$ 2.6 million
$ 3.1 million
X=58.71% or 59%

MAXIMUM ENERGY CONVERSION AND REVENUE MANAGEMENT
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Question 3
The company has a duty and ethical obligation to inform the shareholders of their
investment decision because it may result in financial losses and diminished dividends; and
moreover, they are accountable to the shareholders since they are the “owners” of the
corporation. Corporate social responsibly is defined as an established business model that is
developed for the sake of self-regulation in a company (McGuigan, Moyer, & Harris, 2016). This
model makes the company socially accountable to the public, stakeholders, and itself as an
independent legal entity. This phenomenon is also referred to as corporate citizenship. Corporate
social responsibility (CSR) makes organizations conscious of their overall impact on economic,
social, and environmental areas of society. As such, CSRs ensure that all activities undertaken by
a business entry are directed towards the betterment of society. For instance, organizations in the
European region are encouraged to move away from coal energy as a means to reduce their
carbon footprint (Harris, 2008). CSR is a good way for organizations to discern whether the
continued use of coal energy is beneficial or harmful to society as a whole. On the other hand,
the increment of the cost of coal in tons ensures that companies do not consider it to be a cheap
substitute to environmentally-friendly energy sources like wind and solar power.
Question 4
There are special situations where investing in a negative NPV project ends up in raising
shareholder’s value. Here are three situations under which a company will seek to maximize
shareholder’s value by investing in negative NPV projects. When taxes on dividends to be paid
out to shareholders exceed the negative NPV, the company considered it a maximization move
when they decide to invest funds in a negative NPV instead of paying out dividends. Secondly, if