TEMPES CORPORATION (A)

Tempes Corporation is deciding between two designs for its Water Moccasin deep-sea diving monitor. Design A uses acrylic polymer and cadmium coating, which is cheaper but generates hazardous waste. Design B uses a more expensive, recyclable engineering thermoplastic that reduces parts and leaks but requires higher initial capital for recycling equipment. The company must analyze these options using net present value (NPV) and internal rate of return (IRR) over an eight-year product lifespan, with projected first-year sales of 14,000 units and a 10% annual growth rate.

• Design A utilizes acrylic polymer and cadmium coating to prevent corrosion, but these materials result in the generation of hazardous waste that requires specific EPA permitting and disposal.
• Design B employs a recyclable engineering thermoplastic that allows the base and head to be molded as a single piece, reducing the number of parts and the likelihood of leaks, though it has slightly lower pressure tolerance than Design A.
• Design B has higher material costs—approximately 23% more than Design A when recycling is included—and requires additional capital investment for recycling equipment, totaling $3,500,000.
• Market projections for the Water Moccasin line estimate first-year sales of 14,000 units with a 10% annual growth rate over an eight-year product life span.
• The two designs have different pricing strategies: Design A is priced at $550 per unit, while Design B's leak-proof characteristics allow for a premium price of $615 per unit.
• Tempes Corporation's financial analysis for the project uses a cost of capital of 15% and assumes the investment will be funded through retained earnings without debt.

APA

Jr., L. M., Lovejoy, W., Cummings, C. A., Sastry, A., & Jacoby, H. (1995). TEMPES CORPORATION (A). World Resources Institute. https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf

Chicago

Jr., Lawrence Molinaro,, William Lovejoy, Christopher A. Cummings, Anjali Sastry, and Henry Jacoby. TEMPES CORPORATION (A). World Resources Institute, 1995. https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf.

Wikipedia

{{cite report |last1=Jr. |first1=Lawrence Molinaro, |last2=Lovejoy |first2=William |last3=Cummings |first3=Christopher A. |last4=Sastry |first4=Anjali |last5=Jacoby |first5=Henry |title=TEMPES CORPORATION (A) |publisher=World Resources Institute |date=1995 |url=https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jr1995tempes, author = {Jr., Lawrence Molinaro, and Lovejoy, William and Cummings, Christopher A. and Sastry, Anjali and Jacoby, Henry}, title = {{TEMPES CORPORATION (A)}}, institution = {World Resources Institute}, year = {1995}, url = {https://pdf.wri.org/bell/case_1-56973-176-4_full_version_a_english.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }