| Summary: | 碩士 === 逢甲大學 === 經營管理碩士在職專班 === 96 === In view of the recent application of ethanol gasoline has been generally recognized as promoting energy independence and the global trend in energy saving and environmental protection, further development in ethanol gasoline is imperative. Base on the case company’s existing production know-how, production facilities, raw material purchase and cost competitive advantage against new rivals, the case study, by applying capital budget decisions, demonstrates that the investment can be fully recouped in 8 years and the internal rate of return is greater than cost of capital at 4.63%, under the net present value method. By using the accounting rate of return method, payback period method and profitability index method, the initial capital expenditure can also be fully recouped in addition to making a good profit. In view of the short payback period, minimal amount of capital expenditure and higher rate of return, the case study suggests scenario 2 is the best investment.
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