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About this walkthrough

This modified browser walkthrough reproduces NIST CATS v1.1 Example 10. Choose a budget and MEER to see how the published option ledger and pairwise environmental tradeoff change the preferred project.

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Choose the declared decision limit that should govern the fixed Example 10 option set.

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A manufacturing investment can improve environmental performance while producing a weaker financial return than another option. Cost Assessment Tool for Sustainable Manufacturing (CATS) analysis makes that tradeoff explicit by combining familiar financial measures with a decision maker's stated willingness to pay for environmental improvement.

Net present value (NPV) converts the study-period cash flows to a value at the analysis date. Internal rate of return (IRR) expresses the discount rate at which NPV would be zero. Environmental impact change records the relative improvement or worsening. When an environmentally preferable choice has a lower NPV, the maximum environmental expenditure rate (MEER) supplies the decision boundary in dollars per percentage-point improvement.

This walkthrough is deliberately narrower than the CATS workbook. It reproduces NIST CATS v1.1 Example 10, a 10-year comparison using a 4% discount rate and four fixed alternatives. The only decisions are the available investment budget and MEER. Cash flows, published NPV and IRR values, and environmental changes cannot be replaced with a real project's data.

Option Investment NPV IRR Environmental change
Status quo$0$00%0 points
Alternative 1$100,000-$3,3573.2%-5 points
Alternative 2$150,000$50,72911%-10 points
Alternative 3$200,000$39,9288%-20 points

The preferred option is conditional, not universally best. Budget first removes unaffordable alternatives. MEER then decides whether the additional environmental improvement justifies an adverse NPV tradeoff. A real investment still needs current cash flows, taxes, financing, uncertainty, operational constraints, and the full decision process.

How to Use This Tool:

Choose the decision limits to apply to the fixed NIST Example 10 ledger. Do not enter a real project budget by rounding it to the nearest offered value.

  1. Start the CATS walkthrough and choose an Investment budget cap of $100,000, $150,000, or $200,000.
  2. Choose the Maximum environmental expenditure rate from $500, $1,000, $2,000, or $5,000 per percentage-point reduction. The $2,000 choice reproduces the published Example 10 assumption.
  3. Finish the two inputs and read the Recommended Example 10 option with its investment, NPV, IRR, environmental change, and applied tradeoff rate.
  4. Compare the selected option with every affordable row. If the result will inform a real decision, move to the full NIST method with project-specific cash flows and uncertainty analysis.

Interpreting Results:

Recommended Example 10 option means preferred under the fixed published values and the two declared limits. It does not mean the alternative is financially or environmentally optimal for another facility.

Budget is a hard affordability gate. At $150,000, Alternative 3 is excluded even if MEER is very high. At $200,000, Alternative 3 becomes affordable, but it is preferred to Alternative 2 only when MEER covers the $1,080.10 cost for each additional percentage point of environmental improvement.

A zero applied tradeoff rate means the selected comparison did not require accepting lower NPV for environmental improvement. It does not mean environmental impact has no value or that the choice carries no financial risk.

Technical Details:

The option ledger is a fixed lookup from NIST AMS 200-11 Appendix B, Example 10. The recommendation logic does not recalculate NPV or IRR. It applies affordability and pairwise MEER rules to the published values.

Formula Core

For an environmentally better option with lower NPV, the tradeoff rate is the absolute NPV loss divided by the additional percentage-point reduction in environmental impact.

tradeoff rate = |NPV loss| additional environmental reduction Alternative 1 vs status quo = 33575 = 671.4 USD per percentage point Alternative 3 vs Alternative 2 = 1080110 = 1080.1 USD per percentage point

The comparison uses the exact unrounded rates. Displayed currency may add separators or two decimal places, but the branch decisions are made against 671.4 and 1,080.1.

Rule Core

Priority Condition Selected option
1 Budget is at least $200,000 and MEER is at least $1,080.10 Alternative 3
2 Otherwise, budget is at least $150,000 Alternative 2
3 Otherwise, budget is at least $100,000 and MEER is at least $671.40 Alternative 1
4 No earlier condition is met Status quo

The official Example 10 choices of a $200,000 budget and $2,000 MEER satisfy the first rule, so Alternative 3 is selected. Its published NPV is $39,928, IRR is 8%, and environmental change is a 20-percentage-point reduction.

Limitations and Privacy:

This bounded walkthrough is educational and is not financial, accounting, investment, or environmental-certification advice. It omits custom cash flows, hurdle-rate changes, tax and financing effects, Monte Carlo sensitivity analysis, and other full-workbook features.

Budget and MEER choices stay in the current browser tab and are not placed in the URL or sent to a service. Starting again clears the in-memory choices. Any downloaded or copied result should still be treated as a record of assumptions, not as approval for a real investment.

References: