Australian Property Management: Solar Compactor Bin Financial Analysis

This report provides a financial analysis of purchasing a solar-powered trash compactor bin for Australian Property Management. It explores funding options, including equity shares and bank loans, recommending a bank loan due to tax benefits and control retention. The report details the initial and maintenance costs, along with the impact on the current and next year's operational budgets. It examines the effects on the profit and loss statement, balance sheet, and cash flow statement. Furthermore, the analysis includes a payback period calculation and net present value. The report highlights the benefits of the solar-powered bin, such as waste reduction and environmental improvement, concluding that it can significantly reduce costs and improve waste management. The report also includes references to support the analysis.

Facilities management

TABLE OF CONTENTS
Task 3...............................................................................................................................................3
Funding for the purchasing of the solar-powered trash compactor bin.......................................3
The initial price of the solar-powered trash compactor bin.........................................................4
Annual maintenance requirement and the cost of the solar-powered trash compactor bin.........4
Impact on the current year operational budget and the next year operational budget.................4
Impact on the profit and loss, balance sheet and the cash flow statement of the company.........4
Payback period and the net present value....................................................................................5
Benefits of solar-powered trash compactor bin...........................................................................6
References........................................................................................................................................8

TASK 3
Funding for the purchasing of the solar-powered trash compactor bin
The company can purchase the solar-powered trash compacter bun either by the raise the funds
through the issue of the equity shares of the company or by taking the bank finance from the
banks or the financial institutions (Balaban, Župljanin, and Ivanović, 2016).
Raising funds through the issue of the equity shares is regarded as the permanent funding since
generally in the future it is not required to repay the amount. Further by issuing the equity share,
the company can get the advantage of reducing the debt of the firm (Gorton, and Winton, 2017).
Moreover, there is no obligation to pay the interest and the principal amount; the company is
required to pay only the dividend declared by the company in its annual general meeting to the
shareholders. Apart from the above obtaining the funds by issuing the shares is the flexible
process as the company can decide the number of issue of the shares, price as per the
requirement of the funds for the company (Vismara, 2016). However, through the issue, the
control over the company will be diluted as the new investor by purchasing the share of the
company can exercise the control over the company.
On the other hand, for purchasing the compactor bin company can take the funds from the banks
after keeping any security to the bank. In this situation, the company is required to the pay the
interest and the principal amount in a timely manner. The Company can avail the tax benefit on
the payment of interest paid to the banks. Further, the bank finance does not dilute any control
over the company. Therefore, the control remains only with the existing shareholders of the
company. However it may be possible that bank can put some compliance with the company,
then it will be necessary for the company to follow all the compliance according to the terms of
the bank.
On the basis of the above evaluation raising funds through the bank loan will be a more proper
source of finance for the Australian Property Management company, due to the growth and the
size of the company. The company can get the tax benefit advantage on the payment of the
interest to the bank. Along with this, the control will remain to the existing shareholders of the
company.

The initial price of the solar-powered trash compactor bin
By considering the landfill cost $ 182.95 per ton and the service cost of $ 225.54 per bin, it has
been assumed that the total initial cost for purchasing the solar compactor trash bin for the
company will be $ 50 Million.
Annual maintenance requirement and the cost of the solar-powered trash compactor bin
For maintaining the quality of the solar-powered trash compactor bin, it is required to invest
some amount for the maintenance by the company. The company is required to upgrade the
software time to time which is attached with the compactor bin (Price schedule, 2018). It has
been assumed that the ongoing maintenance cost per year for the company will be the 5% of the
original cost of the company that is $ 2.5 million per year.
Impact on the current year operational budget and the next year operational budget
By purchasing the solar-powered trash compactor bin the asset liabilities and the profits of the
company will be getting impacted. Operational budget of the company in the current year will be
impacted by increasing the non-cash expenses such as the amount of depreciation charged on the
compactor bin along with the cash expenses such as the interest amount paid to the bank for
financing the compactor bin. However, the earlier operational expenses on the compactor bin
also reduced by the company. Therefore the benefit from reducing the operational expenses also
reflect the operational budget of the company. Further in the next year, the expenses related with
the depreciation and the interest will be the same as in the previous year, however, due to the
experience from the uses of the compactor bin, the effectiveness of the company increases,
which will provide the more beneficial as compared to the earlier year, this will lead to the good
impact on the operational budget.
Impact on the profit and loss, balance sheet and the cash flow statement of the company
The profit and loss account, balance sheet and the cash flow statement would be affected by the
purchasing of the solar-powered trash compactor bin. In the profit and loss account, the expenses
of the company will increase by the amount of depreciation charged on the compactor bin and
the payment of the interest to the bank on availing the loan for purchasing the compactor bin.
Further, in the balance sheet, the amount of the fixed asset will be increased by the purchase cost
of the compactor bin, in this purchase cost all cost associated with the purchase also included.
The liabilities will be increased by the amount of the loan taken from the bank. This liability will

form part of the non-current liability of the company. Apart from the above in the cash flow
statement, the proceeds from borrowing the money from the bank will get an increase. Further,
the amount of purchasing the equipment will be deducted from the investing activities of the
cash flow statement.
Payback period and the net present value
Payback period= investment required/net annual cash inflow
In this case, the amount of the investment required is $ 50 M., and the saving will be the 15% of
the purchase price over the five years that is $ 7.5 M. Therefore, the payback period will be
50/7.5= 6.66 years.
Net present value can be calculated by deducting the present value of the annual cash flow from
the initial purchase price of the compactor bin.
The discounted rate for calculating the present value of the annual cash flow assumed 10%
year annual inflow ( $M) present value factor 10% present value
1 7.5 0.909 6.8175
2 7.5 0.826 6.195
3 7.5 0.751 5.6325
4 7.5 0.683 5.1225
5 7.5 0.62 4.65
total present value 28.4175
Initial investment $ 50 M
Net present value= -21.8525 from (-50+28.4175)

Benefits of solar-powered trash compactor bin
Solar powered trash compactor bin is the device which is connected with the network and enable
to working with the other connected devices also. This compactor bin is attached with the waste
compactor bin, which is used for the storage of the waste of the garbage, metal, plastic etc. for
the short span of the time (Ravi, and Charanthimath, 2018). The solar-powered trash compactor
bin connected with the waste compactor bin able to identify the fill level of the waste compactor
bin and can give the symbol of the stop level of waste compactor bin on the real-time basis.
Along with this, the solar-powered compactor bin also engages in the process of reducing the
size of the waste through the compressing the waste, by which the more waste can be stored in
the compactor bin. The waste is compacted in a more comprehensive manner by which the air
level within the bin minimized to a great extent.
It is very beneficial for the people who throughout the garbage and also for the companies who
are engaging in collecting the waste. The solar-powered trash compactor bin is accessible for
residential use as well as the commercial use by the industries (Alsbou & et al., 2018). Further,
the solar-powered trash compactor bin also enhances the size of the waste compactor bin by five
to eight times. In this system, the compacter bin operated by the battery, which is charged
through the solar energy and the battery also preserve the energy for the future use of near about
the three to four weeks. This preservation capacity depends on the regularity of the compaction
and the manner of the use of the compactor bins.
What the operation of the solar-powered trash compactor bin is depended connected with the
remote software platform through the wireless network. The persons connected with the waste
management can obtain the actual data analysis and issues related with the compactor bin. These
type of the compactor bin generally implemented in the residential buildings, commercial
buildings, supermarkets, beaches and etc.
The solar-powered trash bins enable for decreasing the removal of the waste collection. Along
with this, this type of compactor bin also enhances the cleanliness by storing the garbage in the
proper manner at the building or at the public space (Suez offerings, 2018). Further by
implementing this type of compactor bin, harmful disease related to the waste product can also
be reduced to a significant level. Moreover, it also enables the company to analyze the data from
the waste collection, because the software connected with the bin can provide all the related data.

The main and the important benefit from installing the solar-powered trash compactor bin is to
improve the environment by reducing the greenhouse gas emission. Further, the operational cost
associated with the waste can also be reduced to the great extent by the solar-powered trash
compactor bin. Overflow problem of the waste from the compactor bin also eliminated by the
solar-powered compactor bin.
Therefore the Australian Property management by using the solar-powered trash compactor bin
as a part of the plant and machinery can obtain the major benefit of the reduction in the cost.
Along with it also helps the company for managing the waste generated from the construction
activity in a proper and effective manner.

REFERENCES
Alsbou, N., Samad, M.A., Alhashem, M. and Abuabed, A.S., 2018, June. Developing a Self-
Powered Enlarging Smart Waste Bin. In 2018 14th International Wireless Communications &
Mobile Computing Conference (IWCMC)(pp. 683-689). IEEE.
Balaban, M., Župljanin, S. and Ivanović, P., 2016. Sources of Finance for Entrepreneurship
Development. Economic Analysis, 49(1-2), pp.48-58.
Gorton, G. and Winton, A., 2017. Liquidity provision, bank capital, and the
macroeconomy. Journal of Money, Credit and Banking, 49(1), pp.5-37.
Price schedule, 2018. Available through <
https://www.contractswa.finance.wa.gov.au/.../CUAWAS2016_-_Price_Schedule.xlsx >.
[Accessed on 5th October 2018].
Ravi, S.M. and Charanthimath, S.G., 2018. Design and Fabrication of Solar Powered Waste
Management System. International Journal on Recent and Innovation Trends in Computing and
Communication, 6(5), pp.302-311.
Suez offerings, 2018. [Online]. Available through <https://www.suez.com.au/en-AU/our-
offering/businesses/how-can-we-help-you/waste-management/equipment>. [Accessed on 5th
October 2018].
Vismara, S., 2016. Equity retention and social network theory in equity crowdfunding. Small
Business Economics, 46(4), pp.579-590.