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Summary AC504 Unit 3 Assignment 2.docx In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the rec$4.99
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Summary AC504 Unit 3 Assignment 2.docx In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the rec
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AC504 Unit 3 Assignment In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to incorporate a new technology, which used recycling techniques for wastewater. The new idea would protect the environment, sell the reclaimed wastewater, and it would be cost effective ...
ac504 unit 3 assignment 2docx in the kardell paper co
a proposal was brought up to the ceo and board of directors to incorporate a new technology
which used recycling techniques for wastewater the
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In the Kardell Paper Co., a proposal was brought up to the CEO and board of directors to
incorporate a new technology, which used recycling techniques for wastewater. The new idea
would protect the environment, sell the reclaimed wastewater, and it would be cost effective in
the long term. The downsides to consider would be it would cost about $70 million to
incorporate this new technology, the plant would have to operate at a reduced capacity level
short term and even be closed down short term to make all of the necessary changes. Using the
modified 5-question approach and cost benefit analysis table, this will help with the
recommendation to the board of directors on whether they should accept or deny this installation
of new technology. The board of directors did make the decision to refuse the new technology
but going through the 5-question approach will determine the ethicality of that decision.
Background
The Kardell paper mill has several facilities in different locations with the original and
largest being established on the Cherokee River in southeastern Ontario. This location is still the
company’s largest profit center. The company is publicly traded and shares are widely held. The
firm has a record of reporting good profits and paying generous bonuses to senior levels. The
facility employs 500 people out of a community of 22,000 along the Riverside. At the time the
facility was built, it was not designed around protecting the environment and the wastewater is
discharged into the Cherokee River. There is a screening to remove only the level of
contaminants into the river that are required by the provincial regulations. There are other
industrial plants along the river next to the Kardell plant. One of the managers at the Kardell
plant was sensitive to environmental issues and hired a summer student to conduct tests on the
River for its water quality. The tests concluded with showing high readings of an industrial
chemical called sonox. This presented a problem as these results were not included in the plants
COBHAM PRIVATE
, monthly reports to management. With this information, the manager had brought it to the CEO
with a recommendation that Kardell carries out an environmental audit of its operations, as the
manager pointed out local doctors were expressing health concerns on the rise in the community.
The manager offered his solution of adopting a new processing technology that used recycling
techniques for wastewater. The technology operates in a closed cycle that protects the
environment but also reclaims the waste material to be sold to chemical producers (Brooks &
Dunn, 2017).
Profitable
To determine the answer to is it profitable, I use a cost benefit analysis table to show the benefits
and costs, which then provides the benefit cost ratio. We have the cost of the new technology at
70 million, annual revenues of 750 million, profit margin around 12%, and approximate cost of
litigation 1.8 billion. Other costs include 5 million in onboarding after shut down, operating at
55% capacity for one year and shut down the second year, and a three-year tax on profits at 5%.
Using the information I then filled out a cost benefit analysis table, which shows when the
probability that the litigation will occur is greater than 63%, the benefits outweigh the costs.
Benefit/Savings 100% 25% likely 50% likely 75% likely
Present Value (at 20%) of Possible Litigation 360 Mil 90 180 270
Cost to Implement New Technology
Decrease in Profit during Year 1 49.5 49.5 49.5 49.5
Decrease in Profit during Year 2 90 90 90 90
Actual cost of new technology 70 70 70 70
Onboarding/Training new employees 5 5 5 5
Additional Local Taxes 13.5 13.5 13.5 13.5
Net Benefit 132 -138 -48 42
63%
COBHAM PRIVATE
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