Countermeasures to Automobile-Exhaust Pollution Essay Example for Free

Countermeasures to Automobile-Exhaust Pollution Essay The world motor vehicle population exceeds 1 billion units at the moment. These vehicles are used for transportation of people and products across various places around the world. As a result, they emit many pollutants. This is attributable to the action of their engines burning fuel to release energy, which is an inefficient process. Firstly, they release particulate matter consisting of both organic and inorganic substances into the atmosphere, through exhaust emissions. Secondly, they release Volatile Organic Compounds (VOCs), which have carcinogenic effects. Pollution from vehicles is a universally acknowledged problem. However, it varies depending on the nation and its population. For example, pollution from cars contributes to between 50 to 90 percent of the total in urban areas. This may not be the same for rural areas. However, motor vehicles still present a disadvantage to the environment and human life. It is, therefore, prudent to develop countermeasures to automobile-exhaust pollution. Most of the world’s vehicles are operated on conventional hydrocarbons such as diesel and gasoline. By switching to fuel that maintains less pollution, the environmental impact of vehicles can be minimized. An alternative fuel technology that has the potential to meet this challenge is fuel cells. In this technology, hydrogen has maintained the best promise as a candidate to replace petroleum-based fuels. This technology utilizes hydrogen gas to create electricity. This electrical energy is converted to mechanical energy through an electric motor, which makes the wheels of an automobile to rotate. In this process, the emissions developed are pure water, Carbon (IV) Oxide and various oxides of nitrogen. This emissions are attributable to difficulties in storage and commercial production. Despite the release of oxides of carbon and nitrogen into the air, hydrogen fuel cells have a smaller footprint on the environment, when compared to conventional gasoline engines. However, such inefficiencies can be eliminated through use of concrete, as researched by a study at the University of Eindhoven (Yirka npp). The easiest method for manufacturing hydrogen gas at the moment requires mining fossil fuels, which has an environmental impact in its own right. However, new production techniques such as bacteria and biomass waste are expected to become conventional in the coming years. This will reduce the environmental impact of fuel cells, since the technology will lower oxides released into the air (Katsuhiko 3371). A hydrogen fuel cell works by the introduction of hydrogen at the cathode and oxygen at the anode. In the process, water is released out. Anions and cations from the cell are harnessed at the respective terminals, and energy is released. Hydrogen has a high energy content of around 150MJ/Kg or 61,100 BTUs per pound. This exceeds gasoline and its 20,900 BTUs of energy per pound. High energy content implies that less fuel is required to maintain the same amount of power in engines, or to travel the same distances. Similarly, it has a higher efficiency when used in combustion engines. Advanced hybrid engines such as that of the Prius maintain an efficiency of about 40% (Potera 38). However, hydrogen has an efficiency of about 75% when used as the lone source of fuel. This efficiency means that greater distances can be covered with less consumption of energy. However, introduction of additional hydrogen fuel cell cars has been hampered by infrastructural issues. There are limited facilities that allow fuelling to conventional commuters within their localities (Katsuhiko 3369). There are many electric cars (EVs) on modern roads. Examples may be seen from Tesla’s roadster and the Nissan Leaf car. These vehicles release virtually no emissions to the environment, therefore are a solution to automobile-exhaust problems. This is attributable to their engines, which do not burn fossil fuels in order to release energy. Electric cars use sets of linked batteries as their primary source of energy. These energy sources comprise materials such as lithium, lead and nickel-metal hydrides. These batteries typically consist of thousands of cells such as the lithium-ion type. They store energy that has been harnessed from electrical outlets at home, or the recharging stations that are found in some major cities. In the example of the Model S, the vehicle is charged through a ‘high power wall charger’. This device is replenishes the batteries around twice as fast as conventional power outlet would manage. Electric batteries are used to operate everything in the vehicle. They are used to run a controller which serves to run an electric motor. This motor is what rotates the wheels in EVs. Through recent breakthroughs in manufacturing, EV batteries can be mass-produced. There are now lower costs of ownership and maintenance to the consumer, when compared to the past. Batteries have a very high energy density, when compared to fuel cells. As a result, they offer higher mileage than traditional fuels. The Tesla Model S provides a good example of mileage. It can manage about 300 miles of travel at a speed of 55 miles per hour, out of its lithium ion batteries. Even conventional lead-acid batteries allow a range of 80 miles. EVs are characterized by high torque and low speeds. They are, therefore, very useful for usage within cities, where many vehicles are located in smaller vicinities than rural areas. They will help in reducing urban pollution since they do not release exhaust into the environment. The production of EVs often has higher environmental pollution than conventional cars (Lave and Hendrickson et al. 993995). Improvements in production are needed for the solution of such issues. However, the usage of such vehicles is limited by infrastructural issues, just as the hydrogen fuel cells. As a result, the Environmental Protection Agency (EPA) has highlighted that only 4,000 EVs are currently running on American roads. This contrasts to gasoline-based vehicles which are in the millions. New breakthroughs in charging and fuel range are required for such EVs to gain critical mass of commuters. The larger the distance a vehicle is driven, the more pollutants it releases to the environment. According to the EPA, over one third of smog emissions are attributable to vehicle use in urban areas. However, more people have taken to the roads since the 1970s. Similarly, they have driven for longer miles hence attenuated the pollution problem. This has only served to attenuate the problem at hand. People usually drive for many reasons. Firstly, it may be as a means for arriving at work. Secondly, they do it to access leisure areas such as parks. Thirdly, they drive to shopping centers to do their groceries. There are ways that people can drive fewer miles while accomplishing all these needs. Firstly, they can involve themselves in carpools. This refers to the sharing of cars on journeys, between different people, such that several people drive in one car simultaneously. This is useful in that lower miles are collectively driven, hence reduced environmental pollution from exhausts. Through carpooling, people can get to work or leisurely places without inconveniences such as fuel costs, long drives and pollution. Carpooling is possible through websites, apps and pickup points. Use of public transport vehicles also achieves the same effect. People should use buses and other public transport means, whenever possible. Secondly, people can reduce the environmental footprint of their cars by combining errands into a single trip. This is especially useful in the case of families that own multiple cars. Instead of sending different people to pick up items needed by the family, one vehicle may be used to collect all these items. Shopping often requires the use of vehicles, since the luggage may be overbearing. In that respect, pollution can be reduced through use of the efficient e-commerce platforms such as Amazon. Individuals are able to meet their shopping needs while reducing their environmental footprint. The use of trucks for shipping goods is also useful since it allows collectively leaner environmental emissions when compared to many cars operated by shoppers. The internet has allowed various individuals to work at home. Similarly, it has enabled people to telecommute. It would, therefore, be environmentally beneficial if people used these tools instead of driving to work on each applicable day. These measures also reduce congestion in traffic. There will be fewer vehicles on the road, thus fewer delays that accumulate into environmental pollution through release of exhausts. In the modern world, settlement has been defined by work and educational opportunities. For example, people try to live as close to work as is comfortably possible. This has been attributable to efforts in reducing travel times, as well as associated fuel costs. According to the United States Census Bureau (npp), over 10 million Americans travel an hour each way to work. This has provided a challenge to the country’s urban planners and engineers. There has been a trend in altering commuting patterns through development of areas that provide ‘walkable communities’. This concept implies areas that require less motorized movements in order to get around (Fullerton Gan 303). Through walkable communities, commuters would be able to reduce their environmental footprints as they get around. Residential, leisure, business and industries are developed in a common area such that people get to each point devoid of cars. Alongside reduction of pollution, the quality of life is also improved for people residing in such locations, since they are able to exercise. Through use of alternative fuels, environmental emissions can be reduced. However, arguably the best approach to reducing such wastes would be an alteration of driving habits. In that respect, an effective method for reducing both fuel consumption and environmental emission would be a reduction in vehicle idle time. When people sit in their cars while their engine runs, they release exhaust just as they were driving. This happens during conditions such as traffic among others. In that respect, it would be prudent if people learn to switch of their engines in such circumstances. Manufacturers should also implement the start-stop systems across a wider range of cars. This will allow engines to switch off, when the cars are stationary. By stepping on the gas pedal, vehicles are able to start their engines immediately. This reduces the annoyances associated by drivers to starting their engines again. Cars of the past featured inefficient engines. They released more particulate wastes into the environment, while consuming more fuel than contemporary variants. However, some of these cars are still in service today. Despite good maintenance, older vehicles become less efficient than their original state. . Drivers should be encouraged to drive newer vehicles. For example, modern cars such as the Prius offer nearly triple the efficiency of older cars, in terms of fuel consumption and environmental consumption. Newer cars also adhere to modern emission controls that are set by the EPA and other responsible bodies (Dennis-Parks 799). In the United States, public transportation policy has been left to local authorities in cities and towns. As a result, the country lacks a homogenized transportation system. Schedules for buses and trains have difficulties in being followed. These systems are also characterized by slow speeds of movement. This has created frustration among users, who view cars as efficient modes of transportation. Similarly, American culture has often painted a tainted picture on public transport systems. The car has been portrayed as a symbol of achievement. The converse has been applied for transport systems such as buses. The American Public Transport Association states that usage of public transportation results into savings of over 35 million metric tons of Carbon (IV) Oxide on an annual basis. By switching to public transport for the average American round trip of 20, miles daily, an individual is able to reduce their annual emissions by over 4,000 pounds (Fullerton Gan 303, 304). Going to work is one of the key reasons behind owning a car in the United States. In that respect, companies can make a significant contribution to the efforts against environmental pollution. Firstly, they can provide shuttle bus services to their employees. In that respect, they can purchase or hire buses that will pick up and drop off employees at designated points, on each work day. This will assist in reducing vehicle emissions due to ride sharing. This can be seen through Google, which operates shuttle services for its employees. Secondly, companies can post ride-share boards in their premises. This will allow employee who live close to each other to commute on a single vehicle, thus saving fuel and the environment. Some companies have also assisted employees through creation of car cooperatives. These are services that allow employees to rent cars from a set location. In return, the employees pay small fees for their use of the cars. Such systems are very useful for people working in inner city districts, who need cars only on a rare occasion. This encourages them to use public and shared transport, as opposed to personal vehicles. It is estimated that the global urban population will almost double by the mid-21st century. As a result, alternate means of transportation need to be crafted for the urban populations. The use of motorized vehicles will only result into further environmental pollution in such areas. Urban dwellers will consequently be exposed to poor health and effects such as smog. In that respect, local authorities need to establish policies that encourage non-motorized commuting. Bike sharing programs are similar to car cooperatives, only that they are not characterized by polluting effects (Fullerton Gan 301). Different cities have made attempts at bike sharing programs. However, they are not meant to eliminate the use of motorized transport completely. Public transport and cars is used for commuting to centralized locations, where bicycles can then be accessed for movement within urban areas. Errands that exist within a radius of one mile are practical by foot. Similarly, bikes are useful for errands within five miles, which characterizes the inner city. Various cities around the world have embraced such measures. For example, the Chinese cities of Beijing and Shanghai have bike sharing programs that have operated very well. Cities may also embrace some measures, which may be rather draconian. For example, cars whose registration ends with odd numbers may be allowed access to roads on particular days of the week. This measure will allow a curtailment of excessive vehicles on roads. Similarly, it will encourage ride sharing programs. Cars have an impact on environmental pollution, especially in the urban context. In that respect, several measures can be observed, in the efforts of reducing exhaust emissions. New technologies such as hydrogen fuel cells and EVs will be useful in reducing emissions such as the oxides of carbon and nitrogen. However, of greater use is the adoption of efficient driving habits by commuters. Car manufacturers also have a role in the reduction of emissions. By rolling out start-stop technology to all cars, high environmental savings can be recorded. Driving to work is an important part of many American lives. Companies can assist in environmental efforts by providing their workers with ride sharing and shuttle facilities. Companies such as Google and Apple present a good example of how this can be implemented. Similarly, local authorities and urban planners have an important role in designing cities that will require little use of motorized vehicles. Through implementation of such measures, massive savings on environmental pollutants can be recorded. Works Cited Dennis-Parks, Reda M. Instructing the EPA How to Regulate Vehicle Emmissions. Ecology LQ, 30. (2003): 799. Print. Fullerton, Don and Li Gan. Cost-effective policies to reduce vehicle emissions. American Economic Review, 95. 2 (2005): 300304. Print. Hirose, Katsuhiko. Materials towards carbon-free, emission-free and oil-free mobility: hydrogen fuel-cell vehicles—now and in the future. Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, 368. 1923 (2010): 33653377. Print. Lave, Lester B, Chris T Hendrickson and Francis Clay Mcmichael. Environmental implications of electric cars.Science(Washington), 268. 5213 (1995): 993995. Print. Potera, Carol. Beyond batteries: portable hydrogen fuel cells. Environmental Health Perspectives, 115. 1 (2007): 38. Print. United States Census Bureau. Megacommuters: 600,000 in U. S. Travel 90 Minutes and 50 Miles to Work, and 10. 8 Million Travel an Hour Each Way, Census Bureau Reports American Community Survey (ACS) Newsroom U. S. Census Bureau. Census. gov, 2013. Web. 2 Dec 2013. . Yirka, Bob. Researchers find treating pavement with titanium oxide reduces air pollution. Phys. org, 2013. Web. 2 Dec 2013. .

Greek Women in The Odyssey :: Homer

The women in The Odyssey are a fair representation of women in ancient Greek culture. In his work, Homer brings forth women of different prestige. First there are the goddesses, then Penelope, and lastly the servant girls. Each of the three factions forms an important part of The Odyssey and helps us look into what women were like in ancient Greece. The role that the housemaids play in The Odyssey is that of servitude. They are expected to serve the suitors and put up with their rude demeanor. During the course of the ten years that the suitors are there, many of the housemaids sleep with them. Upon returning to Ithica, and slaughtering the suitors, Odysseus makes the housemaids who slept with the suitors clean up their dead bodies. After this he hangs them by the neck, with this gesture he indirectly calls them â€Å"harlots†. This indicates one of many feelings toward women of that time. Then there is Odysseus’ wife, Penelope. She is depicted as an individual. Homer makes her character appear as very clever and also very loyal. Never once during Odysseus twenty years of absence does she remarry. She tolerates the suitors in her home for ten years but never chooses, always with the hope that her first husband, Odysseus, will return. Homer also makes her seem clever when she gets all of the suitors to bring her gifts before she â€Å"chooses one† knowing that they are in a short supply of resources. In another instance he portrays her as clever in the way that she keeps the suitor away by weaving the tunic for Odysseus and secretly taking it apart every night. The role Penelope plays is very important because she is seen as a person, not a possession. Finally, there are the goddesses. They represent women in all their glory. They are very human-like in that they feel the same emotions like jealousy, anger, pride, revenge, excitement, joy, compassion, etc. The exception being that they have supernatural powers. Homer even makes then human-like to the extent that they fall in love with mortals, for instance Calypso.

Re-offender puts lives at risk Essay

Ex-convict Mr. Jones was held in custody yesterday for the bribery of 2 local children, Jack and Jill Bramcote. The pair of children aged no less than 12 were bribed with a pack of sweets to climb up the green hill formally known as â€Å"the death trap† to collect a pale of water. The 2 children unaware of the great danger accepted the offer to consequently risk their lives. Whilst on their voyage up the death trap to the derelict well Jack passed out from exhaustion and dehydration, falling 40 meters to the ground. Unfortunately Jill came plummeting after trying to save her be-loved brother. When questioned all Mr Jones had to say was, â€Å"stupid naive kids!† But of cause we all no Mr. Jones is very used to the â€Å"you have a right to remain silent, anything you do say may be held against you in court† concept as this isn’t his first time in trouble with the police now is it Mr Jones?! Mr Jones is due to be in court next week for a number of charges, one of which aiding and betting. Haunted Happenings Two local 9 year old children Jack and Jill Morris were found in a critical state at the bottom of the green hill on Saturday evening. It’s thought that the 2 children were planning on climbing the hill to prove their belief that the derelict well is not haunted and is not the home of â€Å"bloody Mary†. A girl from the children’s school explains the myths,†Ã¢â‚¬ ¦well for generations people that have lived in the village of Nottingham have known that the well at the top of the green hill is haunted and that it is the home of the bloody Mary, a vicious women, who can poses anyone with evil spirits, and marks all victims with a Greek symbol†¦Ã¢â‚¬  Trails found on the green hill have been identified as Jack and Jill’s, the trails were found going up the hill, but none were found coming down it, there is no evidence that Jack and Jill ever came down the hill, yet they both ended up at the bottom of it. Doctors have stated that the cause of the pairs injury was not due to a trip or a fall. Symbols forensics found on the wall of the well have also been found on Jack and Jill on their left shoulder. After an intense 2 days historian’s reported that the symbol means â€Å"let the curse be upon the persons whom are marked† and that it is Greek terminology. Both children are in intensive care and have not yet awoken. Police hope to question the pair when they regain consciousness and have said that until then they cannot comment on the evidence until done so. The green hill and well have both been cordoned off until more evidence has been gathered on the happenings of the 22nd January. Killer construction On Tuesday 23rd October 2008 police found 2 children in a critical state at the bottom of a hill in Nottingham. It’s believed that the children (not named for security reasons) were roaming the town in their holidays and decided to get a drink from a well positioned on the summit of the hill. Prints have been found on the well matching the children’s and so prove they got to the well, but after having a drink the pair had a water fight and in frantic running, rushing, ducking and diving the eldest out of the two came stumbling down the hill after falling over a piece of timber. All alone the younger sibling was left startled and shocked, and came running down after her brother only to fall over a scaffolding pole left behind after construction work. The pair was airlifted to the nearest hospital and received urgent medical care. Police investigating found the construction company, Gilford Try to blame due to the state the company left the hill in after aborting a major plan to build a mega-home on the land. The company should by law put up signs, posters and gates with warning and danger written in bold that can be clearly seen, however the company didn’t have any signs or anything to indicate danger. Seen as the company failed to follow the rules, they have been fined à ¯Ã‚ ¿Ã‚ ½300,000. The mother of the children gave us her view, â€Å"†¦I think it’s pathetic, a big company like that would risk lives and their reputation just because they can’t be bothered to put up a few signs! There is no excuse for putting someone’s life at risk and that’s just what they did to both of my children putting them through a lot of pain and suffering. It seems they left behind a death trap only to start building another one†¦Ã¢â‚¬  Susan Miles the mother of the children have begun the process of suing the company and will have a minimum settlement of à ¯Ã‚ ¿Ã‚ ½400,000. Step up or fall down On Monday of last week celebrities Jack Johnson and Jill Hepp were both emitted to hospital with several broken bones after a terrible accident filming choreography for their upcoming movie step up two, the streets. Jack was said to have tripped over whilst lifting Jill, sending the pair flying down the Hollywood hill. First aiders on standby immediately treated the stars while waiting for a helicopter to airlift them both to the nearest private hospital. In a statement the producers of step up two, the streets announced that the films launch date has been postponed until November.

Net Present Value

Critics to DCF methods Ducht an UK companies * However, it is found inappropriate to use DCF methods for investments that have got strategic implications. * There are various reasons for the use of open approach. Since the outcomes of these projects are highly unforeseen, according one interviewee, the application of quantitative tools is not plausible. Therefore, companies tend to apply the rule of thumb methods rather than standardized quantitative models. The justification for not applying quantitative models is some times attributed to the nature of a project. Capital inv appraisal of new technologies: Problems, misconceptions and research directions Specifically, it has been alleged that the traditional appraisal methods of payback, discounted net present value (NPV) and internal rate of return (IRR) undervalues the long-term benefits; that traditional financial appraisals assume a far too static view of future industrial activity, under-rating the effects and pace of technological change; that there are many benefits from investments in new technology which are difficult to quantify and are often ignored in the appraisal process; and lastly, it is claimed that the systems of management control often employed by large organizations compound the bias against those investments which, although expensive, reap rewards vital for lon g-term viability. The first issue is a criticism of financial technique; the next two are criticisms of the way in which business operations are modelled; and the last is an issue of organizationalc ontrol and behavior. * We show that the criticisms directeda traditional appraisal methods may to some extent be based on misconceptions of the financial models and the ways in which they are best used * A similar objection is raised to the use of NPV and IRR. The claim is that discounting future cash benefits under-emphasizes the future benefits of new technology. This problem may be exacerbated by the application of risk premia to the discount rate. New echnology is assumed to be riskier than that which has been well established, Why DCF are bad for business and why business schools should stop using it * The assumptions related to DCF are increasingly becoming so disconnected from business reality that its continued use should come with the following warning, ‘This financial man agement technique is hazardous to your business. ’ * DCF as a capital investment appraisal tool suffers from a number of major limitations. These limitations include its narrow perspective, exclusion of non-financial benefits, overemphasis on the short-term, faulty assumptions about the status quo, inconsistent treatment of inflation, and promotion of dysfunctional/cheating behaviour. Previous authors, including Hastie (1974); Ramasesh and Jayakumar (1993); and Adler (2000) have enumerated and discussed the various sins of DCF. * The objections against the use of DCF for capital investment appraisal have often been objected to themselves. Kaplan (1986), for example, feels that the supposed limitations of DCF are in truth a limitation of the user and not of the technique. For example, the selection of a static discount rate is a failure of the user and not of the technique itself. Likewise, the inconsistent treatment of inflation, the overemphasis on the short-term, faulty assumptions about the status quo alternative, the adoption of a narrow organisational perspective, and manipulative and cheating behaviour are again all mistakes of the user. Even the difficulty of including non-financial benefits is seen as a lack of the financial analyst’s imagination rather than an inherent shortcoming of the technique. To help overcome the problems of DCF for capital investment decision-making, proponents of real options theory have argued for the tandem use of the Black and Scholes’ (1973) model and DCF. – The problem with DCF, and which cannot be overcome by its real options complement, occurs when data is not accessible or quantifiable. Not only do these occasions happen quite frequently, but also they become increasingly common as the decision moves from the operationally mundane to the strategically critical. The missapplication of capital investment appraisal techniques * Surveys of capital budgeting practices in the UK and USA reveal a trend towards the increased use of more sophisticated investment appraisals requiring the application of discounted cash flow (DCF) techniques. Several writers, however, have claimed that companies are underinvesting because they misapply ormisinterpret DCF techniques. * the only justification we can think of for using the accounting rate of return method is because top management believe that reported profits have an impact on how financial markets evaluate a company. This is further reinforced in many companies by linking management rewards to short-term financial accounting measures. Thus a project’s impact on the financial accounting measures used by financial markets would appear to be a factor that is taken into account within the decision-making process. Dimson and Marsh (1994) have expressed concern that many UK companies may be using exces sively high discount rates to appraise investments and, as a result, these companies are in danger of underinvesting. In the USA it has also been alleged that firms use discount rates to evaluate investment projects that are higher than their estimated cost of capital (Porter, 1992). Conclusions: Ducht an UK companies * All the UK case study companies apply combined methods of investment appraisal and most of them combine the DCF techniques with the value based management methods, such as SVA and EVA. The combination among the Netherlands companies, however, is mostly with the accounting based measures. Project decision-making in most of the case study companies is found decentralized, which provides the benefits of teamwork in project management. * In terms of appraisal model selection, however, the result is heterogeneous. Most companies prefer to apply combined methods of appraisal. Uniform methods of evaluation are no applied across all stages of a project, which will make diffi cult the comparison of project values at different stages. Although research in capital budgeting suggests the use of quantitative models for R&D and ICT projects, the application is not found in practice. In contrary, firms are relying on qualitative and non-standard approaches. This does not have rigorous theoretical basis, and hence, the decision-making process may not get an acceptable yardstick for its rationality. Capital inv appraisal of new technologies: Problems, misconceptions and research directions * Payback methods are inadequate appraisal techniques and should never be used alone. NPV and IRR are appropriate ways of valuing future cash-flows. Any bias in their application will be due to a systematic use of too high a discount rate, but this can be avoided by correct analysis. Assumptionsa bout the futurec an lead to bias if an over-optimisticp ictureo f the no-investment position is taken, but again this is an avoidable pitfall. As for the benefits ignored, many of these can be quantifieda nd broughtf ormallyi nto the analysis. W hereb enefitsc annot be quantifiedt, hey shouldn everthelessb e stateds o that they can be givenp roperc onsiderationw hena finalj udgement is made. The bias due to the use of short-term financial criteria can be removed by the use of measures reflecting the longer-term benefits of present investments. In principle, then, the biases of capital-investment appraisals are avoidable, but one difficulty remains. New technology invariably leads to greater complexity, and any unwillingness to face this complexity in the capital-investment process is likely to lead to bias against change. * NPV, IRR and PB undervalue long term benefits * Benefits from investing in technology very difficult to quantify and often are ignored in the appraisal process. DCF analysis places too little weight on the future due to the magnitude of the discount rate (too high). Reasons for a too high discount rate: 1. 2. to compensate non-profit projects 3. – To calculate the required rate of return we use t he CAPM – Managers? interests different from shareholders? ones so higher rate or return determined. Then, again, the critic/problem is not of the appraisal method but of its application or understanding Theory-practice gap in .. : UK The survey results indicate that UK corporations have increasingly adopted prescribed textbook financial analysis. The stage has now been reached where only a small minority do not make use of discounted cash flows, formal risk analysis, ppropriate inflation adjustment and post-auditing. However, managers continue to employ simpler rules-of-thumb techniques. There has not, in general, been a replacement of one set of methods with another, but rather, a widening of the range of ways of analysing a financial decision. Why DCF are bad for business and why business schools should stop using it It has been said, ‘Life must be lived forward but can only be understood backwards. ’ There is no denying that DCF is wonderful at looking backwa rds and calculating, for example, the actual NPV a project has earned. Sometimes, generally when commonplace, operational decisions are involved, DCF can even work as a forward-looking tool. To work in this manner, however, requires the relevant cash flow data to be either present or, perhaps with a bit of work, discoverable. DCF does not work well when the decision at hand is strategic in nature. In these situations, the data is often neither present nor discoverable in time for an ex ante evaluation. Only after the decision is made does useful data likely become available. The condition described here is well captured in the lyrics of the Rolling Stones’ song ‘You Can’t Always Get What You Want’: You can’t always get what you want But if you try sometimes, well you might find You get what you need. When it comes to matters that really matter, DCF and real options theory fail to enlighten us. Instead, they sap managers’ energy by focusing their attention on Pareto’s trivial many at the expense of his vital few. In the end, managers end up missing the forest in their search for the non-existent trees. It is time that as educators, we rediscovered the vital few and culled out the trivial many topics that have crept into our course outlines. DCF should be one of the first topics we drop or at a minimum drastically prune back. It is not only a prime example of the trivial many, but it is a potential hazard to firms that use it for decisions that affect firm strategy. Do I hear any other offers? The missapplication of capital investment appraisal techniques The use of conservative cash flow forecasts, combined with the incorrect treatment of nflation and excessive discount rates observed in the survey suggests that many UK organizations may be rejecting profitable investments. Given these problems it could be argued that DCF procedures should be abandoned or give n little weight in long-term investment decisions. We strongly disagree. DCF procedures should not be ignored or relegated in importance merely because they might be used incorrectly. Instead, decisionmakers should recognize potential problems and be careful to ensure that the financial appraisal is performed correctly. CRITICS TO PAYBACK PERIOD Capital inv appraisal of new technologies: Problems, misconceptions and research directions The objection to payback methods is that they ignore all cash flows after the desired payback period, which may be as short as 2 or 3 years. Thus they take no account of the long-term advantages that many large investments in new process technology bring, so the use of payback criteria is worthy of comment. 5 Payback can be insensitive to considerable variation among projects (in terms of their cash flows). 6 Payback methods are simple rules of thumb. Their attraction is their simplicity, and robustness for making judgements on possibly optimistic costings and uneasily quantified business risks. However, they do ignore medium- and long-term cash flows, and it is perhaps surprising that they seem to be regarded as serious tools of financial analysis. Net present value Firms generally have many investment opportunities available.   Some of these investment opportunities are valuable and others are not. The essence of successful financial management is identifying which opportunities will increase shareholder wealth. There are three basic and related concepts that form the very foundation of modern day finance: present value, net present value (NPV) and opportunity cost. Present value gives the value of cash flows generated by an investment and NPV gives the effective net benefit from an investment after subtracting its costs. Opportunity cost represents the rate of return on investments of comparable risk. Application of these concepts enables us to value different kinds of assets, especially those which are not commonly traded in well-functioning markets. NPV of an asset or investment is the present value of its cash flows less the cost of acquiring the asset. Smart investors will only acquire assets that have positive NPVs and will attempt to maximize the NPV of their investments. The rate of return received from an investment is the profit divided by the cost of the investment. Positive NPV investments will have rates of return higher than the opportunity cost. This gives an alternate investment decision rule. Good investments are those that have rates of return higher than the opportunity cost. This opportunity cost can be inferred from the capital market and is based on its risk characteristics of the investment. To assess why Net Present Value leads to better investment decisions than other criteria, let us start with a review of the NPV approach to investment decision making and then present four other widely used measures. These are: the payback period, the book rate of return, the internal rate of return (IRR) and profitability index. The measures are inferior to the NPV and should not, with the qualified exception of the IRR, normally be relied upon to provide sound investment decisions. These measures are commonly used in practice. The NPV represents the value added to the business by the project or the investment. It represents the increase in the market value of the stockholders’ wealth. Thus, accepting a project with a positive NPV will make the stockholders better off by the amount of its NPV. The NPV is the theoretically correct method to use in most situations. Other measures are inferior because they often give decisions different from those given by following the NPV rule. They will not serve the best interests of the stockholders (Brealey, 2002). To calculate NPV we should firstly forecast the incremental cash flows generated by the project and determine the appropriate discount rate, which should be the opportunity cost of capital. Then calculate the sum of the present values (PV) of all the cash flows generated by the investment. NPV = PV of cash inflows – initial investment. To make decision on investment, we should accept projects with NPV greater than zero and for mutually exclusive projects, accept the project with the highest NPV, if the NPV is positive. The NPV represents the value added to the stockholders’ wealth by the project. The discount rate should reflect the opportunity cost of capital or what the stockholders can expect to earn on other investments of equivalent risk (Brealey, 2002). The NPV approach correctly accounts for the time value of money and adjusts for the project’s risk by using the opportunity cost of capital as the discount rate. Thus, it clearly measures the increase in market value or wealth created by the project. The NPV of a project is not affected by â€Å"packaging† it with another project. In other words, NPV(A+B) = NPV(A) + NPV(B). The NPV is the only measure that provides the theoretically correct measure of a project’s value (Ross, 2002). Payback Period. The payback period is simply the time taken by the project to return your initial investment. The measure is very popular and is widely used; it is also a flawed and unreliable measure. It is simple to calculate and easy to comprehend. However, payback period has very limited economic meaning because it ignores the time value of money and the cash flows after the payback period. It can be inconsistent and the ranking of projects may be changed by packaging with other projects. Discounted payback is a modified version of the payback measure and uses the discounted cash flows to compute payback. This is an improvement over the traditional payback in that the time value of money is recognized. A project, which has a measurable discounted payback, will have a positive NPV. However, the other disadvantages of payback still apply. It is also not simple anymore (Investment Criteria). Book Rate of Return (BRR). This is a rate of return measure based on accounting earnings and is defined as the ratio of book income to book assets. Accounting earnings are reported by firms to the stockholders and the book return measure fits in with the reported earnings and the accounting procedures used by firms. However, the measure suffers from the serious drawback that it does not measure the cash flows or economic profitability of the project. It does not consider the time value of money and gives too much weight to distant earnings. The measure depends on the choice of depreciation method and on other accounting conventions. BRR can give inconsistent ranking of projects and rankings may be altered by packaging. There is very little relationship between the book return and the IRR. (Brealey, 2002). Internal Rate of Return (IRR). IRR is defined as the discount rate at which the NPV equals zero. Used properly, the IRR will give the same result as the NPV for independent projects and for projects with normal cash flows. As long as the cost of capital is less than the IRR, the NPV for the project will be positive. IRR can rank projects incorrectly, and the rankings may be changed by the packaging of the projects. For mutually exclusive projects, IRR can give incorrect decisions and should not be used to rank projects. If one must use IRR for mutually exclusive projects, it should be done by calculating the IRR on the differences between their cash flows (Ross, 2002). Profitability Index. Occasionally, companies face resource constraint or capital rationing. The amount available for investment is limited so that all positive NPV projects cannot be accepted. In such cases, stockholder wealth is maximized by taking up projects with the highest NPV per dollar of initial investment. This approach is facilitated by the profitability index (PI) measure. Profitability index is defined as: NPV/Investment. The decision rule for profitability index is to accept all projects with a PI greater than zero. This rule is equivalent to the NPV rule. The modified rule applied in the case of capital rationing is to accept projects with the highest profitability index first, followed by the one with next highest, and so on till the investment dollars are exhausted. This rule will maximize the NPV and stockholder wealth. If the resource constraint is on some other resources, the profitability index needs to be modified to measure the NPV per unit of the resource that is rationed. The profitability index cannot cope with mutually exclusive projects or where one project is contingent on another (Brealey, 2002). Thus, comparing NVP with other criteria we can assert that NPV is superior to other criteria. First, it is the only measure, which considers the time value of money, properly adjusting for the opportunity cost of capital. Second, it gives consistent measures of the project’s value (i.e. not affected by packaging with other projects). Third, it clearly measures the value added to the stockholders’ wealth. The only exception to the superiority of NPV is when the firm is constrained by capital rationing. This implies that the firm cannot finance all positive NPV projects and should therefore choose projects that give the highest NPV for each dollar of investment. The profitability index that is defined as the ratio of NPV to the investment amount is used to achieve this selection. However, the other criteria for the evaluation of projects are found to be popular in practice. If using them, we should make sure we use them in the best possible way and understand the limitations of them. For example, we should always compare mutually exclusive projects on the basis of the difference between their cash flows, because that it is the cash flows that determine the value of a project. Inadequate forecast of the cash flows can be far more disastrous than using the wrong appraisal technique. Cash flow forecasts are difficult to make and can be expensive. It does not make sense to waste the forecasts by using an inferior method of evaluation. References: Brealey, Richard A. & Myers, Stewart C. (2002). Principles of Corporate Finance, 7th ed. Chapters 5 – 6. Irwin/McGraw-Hill Book Co. Investment Criteria, Chapter 9. Introduction to Finance. COMM 203 Homepage. College of Commerce, University of Saskatchewan, 2004 from http://www.commerce.usask.ca/faculty/loescher/Commerce203/CapitalBudgeting/Investment_Criteria.ppt Ross, S., Westerfield, R., Jordan, B. & Roberts, G. (2002). Fundamentals of Corporate Finance, 4th Edition. McGraw-Hill Ryerson Limited. Net Present Value Critics to DCF methods Ducht an UK companies * However, it is found inappropriate to use DCF methods for investments that have got strategic implications. * There are various reasons for the use of open approach. Since the outcomes of these projects are highly unforeseen, according one interviewee, the application of quantitative tools is not plausible. Therefore, companies tend to apply the rule of thumb methods rather than standardized quantitative models. The justification for not applying quantitative models is some times attributed to the nature of a project. Capital inv appraisal of new technologies: Problems, misconceptions and research directions Specifically, it has been alleged that the traditional appraisal methods of payback, discounted net present value (NPV) and internal rate of return (IRR) undervalues the long-term benefits; that traditional financial appraisals assume a far too static view of future industrial activity, under-rating the effects and pace of technological change; that there are many benefits from investments in new technology which are difficult to quantify and are often ignored in the appraisal process; and lastly, it is claimed that the systems of management control often employed by large organizations compound the bias against those investments which, although expensive, reap rewards vital for lon g-term viability. The first issue is a criticism of financial technique; the next two are criticisms of the way in which business operations are modelled; and the last is an issue of organizationalc ontrol and behavior. * We show that the criticisms directeda traditional appraisal methods may to some extent be based on misconceptions of the financial models and the ways in which they are best used * A similar objection is raised to the use of NPV and IRR. The claim is that discounting future cash benefits under-emphasizes the future benefits of new technology. This problem may be exacerbated by the application of risk premia to the discount rate. New echnology is assumed to be riskier than that which has been well established, Why DCF are bad for business and why business schools should stop using it * The assumptions related to DCF are increasingly becoming so disconnected from business reality that its continued use should come with the following warning, ‘This financial man agement technique is hazardous to your business. ’ * DCF as a capital investment appraisal tool suffers from a number of major limitations. These limitations include its narrow perspective, exclusion of non-financial benefits, overemphasis on the short-term, faulty assumptions about the status quo, inconsistent treatment of inflation, and promotion of dysfunctional/cheating behaviour. Previous authors, including Hastie (1974); Ramasesh and Jayakumar (1993); and Adler (2000) have enumerated and discussed the various sins of DCF. * The objections against the use of DCF for capital investment appraisal have often been objected to themselves. Kaplan (1986), for example, feels that the supposed limitations of DCF are in truth a limitation of the user and not of the technique. For example, the selection of a static discount rate is a failure of the user and not of the technique itself. Likewise, the inconsistent treatment of inflation, the overemphasis on the short-term, faulty assumptions about the status quo alternative, the adoption of a narrow organisational perspective, and manipulative and cheating behaviour are again all mistakes of the user. Even the difficulty of including non-financial benefits is seen as a lack of the financial analyst’s imagination rather than an inherent shortcoming of the technique. To help overcome the problems of DCF for capital investment decision-making, proponents of real options theory have argued for the tandem use of the Black and Scholes’ (1973) model and DCF. – The problem with DCF, and which cannot be overcome by its real options complement, occurs when data is not accessible or quantifiable. Not only do these occasions happen quite frequently, but also they become increasingly common as the decision moves from the operationally mundane to the strategically critical. The missapplication of capital investment appraisal techniques * Surveys of capital budgeting practices in the UK and USA reveal a trend towards the increased use of more sophisticated investment appraisals requiring the application of discounted cash flow (DCF) techniques. Several writers, however, have claimed that companies are underinvesting because they misapply ormisinterpret DCF techniques. * the only justification we can think of for using the accounting rate of return method is because top management believe that reported profits have an impact on how financial markets evaluate a company. This is further reinforced in many companies by linking management rewards to short-term financial accounting measures. Thus a project’s impact on the financial accounting measures used by financial markets would appear to be a factor that is taken into account within the decision-making process. Dimson and Marsh (1994) have expressed concern that many UK companies may be using exces sively high discount rates to appraise investments and, as a result, these companies are in danger of underinvesting. In the USA it has also been alleged that firms use discount rates to evaluate investment projects that are higher than their estimated cost of capital (Porter, 1992). Conclusions: Ducht an UK companies * All the UK case study companies apply combined methods of investment appraisal and most of them combine the DCF techniques with the value based management methods, such as SVA and EVA. The combination among the Netherlands companies, however, is mostly with the accounting based measures. Project decision-making in most of the case study companies is found decentralized, which provides the benefits of teamwork in project management. * In terms of appraisal model selection, however, the result is heterogeneous. Most companies prefer to apply combined methods of appraisal. Uniform methods of evaluation are no applied across all stages of a project, which will make diffi cult the comparison of project values at different stages. Although research in capital budgeting suggests the use of quantitative models for R&D and ICT projects, the application is not found in practice. In contrary, firms are relying on qualitative and non-standard approaches. This does not have rigorous theoretical basis, and hence, the decision-making process may not get an acceptable yardstick for its rationality. Capital inv appraisal of new technologies: Problems, misconceptions and research directions * Payback methods are inadequate appraisal techniques and should never be used alone. NPV and IRR are appropriate ways of valuing future cash-flows. Any bias in their application will be due to a systematic use of too high a discount rate, but this can be avoided by correct analysis. Assumptionsa bout the futurec an lead to bias if an over-optimisticp ictureo f the no-investment position is taken, but again this is an avoidable pitfall. As for the benefits ignored, many of these can be quantifieda nd broughtf ormallyi nto the analysis. W hereb enefitsc annot be quantifiedt, hey shouldn everthelessb e stateds o that they can be givenp roperc onsiderationw hena finalj udgement is made. The bias due to the use of short-term financial criteria can be removed by the use of measures reflecting the longer-term benefits of present investments. In principle, then, the biases of capital-investment appraisals are avoidable, but one difficulty remains. New technology invariably leads to greater complexity, and any unwillingness to face this complexity in the capital-investment process is likely to lead to bias against change. * NPV, IRR and PB undervalue long term benefits * Benefits from investing in technology very difficult to quantify and often are ignored in the appraisal process. DCF analysis places too little weight on the future due to the magnitude of the discount rate (too high). Reasons for a too high discount rate: 1. 2. to compensate non-profit projects 3. – To calculate the required rate of return we use t he CAPM – Managers? interests different from shareholders? ones so higher rate or return determined. Then, again, the critic/problem is not of the appraisal method but of its application or understanding Theory-practice gap in .. : UK The survey results indicate that UK corporations have increasingly adopted prescribed textbook financial analysis. The stage has now been reached where only a small minority do not make use of discounted cash flows, formal risk analysis, ppropriate inflation adjustment and post-auditing. However, managers continue to employ simpler rules-of-thumb techniques. There has not, in general, been a replacement of one set of methods with another, but rather, a widening of the range of ways of analysing a financial decision. Why DCF are bad for business and why business schools should stop using it It has been said, ‘Life must be lived forward but can only be understood backwards. ’ There is no denying that DCF is wonderful at looking backwa rds and calculating, for example, the actual NPV a project has earned. Sometimes, generally when commonplace, operational decisions are involved, DCF can even work as a forward-looking tool. To work in this manner, however, requires the relevant cash flow data to be either present or, perhaps with a bit of work, discoverable. DCF does not work well when the decision at hand is strategic in nature. In these situations, the data is often neither present nor discoverable in time for an ex ante evaluation. Only after the decision is made does useful data likely become available. The condition described here is well captured in the lyrics of the Rolling Stones’ song ‘You Can’t Always Get What You Want’: You can’t always get what you want But if you try sometimes, well you might find You get what you need. When it comes to matters that really matter, DCF and real options theory fail to enlighten us. Instead, they sap managers’ energy by focusing their attention on Pareto’s trivial many at the expense of his vital few. In the end, managers end up missing the forest in their search for the non-existent trees. It is time that as educators, we rediscovered the vital few and culled out the trivial many topics that have crept into our course outlines. DCF should be one of the first topics we drop or at a minimum drastically prune back. It is not only a prime example of the trivial many, but it is a potential hazard to firms that use it for decisions that affect firm strategy. Do I hear any other offers? The missapplication of capital investment appraisal techniques The use of conservative cash flow forecasts, combined with the incorrect treatment of nflation and excessive discount rates observed in the survey suggests that many UK organizations may be rejecting profitable investments. Given these problems it could be argued that DCF procedures should be abandoned or give n little weight in long-term investment decisions. We strongly disagree. DCF procedures should not be ignored or relegated in importance merely because they might be used incorrectly. Instead, decisionmakers should recognize potential problems and be careful to ensure that the financial appraisal is performed correctly. CRITICS TO PAYBACK PERIOD Capital inv appraisal of new technologies: Problems, misconceptions and research directions The objection to payback methods is that they ignore all cash flows after the desired payback period, which may be as short as 2 or 3 years. Thus they take no account of the long-term advantages that many large investments in new process technology bring, so the use of payback criteria is worthy of comment. 5 Payback can be insensitive to considerable variation among projects (in terms of their cash flows). 6 Payback methods are simple rules of thumb. Their attraction is their simplicity, and robustness for making judgements on possibly optimistic costings and uneasily quantified business risks. However, they do ignore medium- and long-term cash flows, and it is perhaps surprising that they seem to be regarded as serious tools of financial analysis.

Death of Illusion essays

Death of Illusion essays The Federals were thick on the ground, lying all about in bloody heaps, bodies disassembled in every style that man could imagine. Inmas only thought looking on the enemy was, Go Home. Home was a place called Cold Mountain in North Carolina. The Civil War novel, by Charles Frazier describes horrific human suffering, Frazier based his story on local history and family stories handed down from his great-great grandfather. He does an excellent job with character development, along with descriptive details in each setting. There are three main characters; Inman, Ada and Ruby. Though separated by war, the characters share a common goal, survival. The realities of their hardships and suffering cause the death of the naive illusions, and lead to the changes necessary to survive. Until the war, Inman had spent his life on Cold Mountain. Like many Young men, he thought the war would be a short duration and an awesome adventure. But it turned into his worst nightmare. Fraziers descriptions of battles like Malvern Hill, Sharpsburg and Petersburg, paint a vivid and gory picture of death and destruction. The war ended for Inman after the battle of Fredericksburg. Wounded, he literally walks away from the war. Inman is not portrayed as a deserter or a coward, but as a broken man who had seen more than he could bear. His walk home to his girlfriend, Ada, was in itself, another war. He faced constant danger, fear, and starvation. He saw himself as disgusting, because of all that he had seen and participated in. Only his need to survive kept him going. Ada was spoiled and sheltered by her preacher father. When he died shortly after the war started, Ada was totally alone. Because she only had social skills, her own war was just beginning. Her only inheritance was a neglected farm. Adas education did not include even the simplest skill, like cooking. She had little hope of running a farm, ...

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