For the following problems, unless stated otherwise, you may assume that the cost of land, L, and
Question:
For the following problems, unless stated otherwise, you may assume that the cost of land, L, and the salvage value, S, of the plant are both zero.
In reviewing current operating processes, the company accountant has provided you with the following information about a small chemical process that was built ten years ago.
Capital investment = $30 × 106($10 × 106 at the end of year 1, $15 × 106 at the end of year 2, $5 × 106 at the end of year 3. Working capital = $10 × 106)
Over the last ten years, the average (after-tax) return on investment that nonprocess projects have yielded is 10%. What is the DCFROR for this project over the last 12 years? (Ignore land and working capital costs.)
In retrospect, was the decision to build this plant a good one?
Step by Step Answer:
Analysis Synthesis And Design Of Chemical Processes
ISBN: 9780134177403
5th Edition
Authors: Richard Turton, Joseph Shaeiwitz, Debangsu Bhattacharyya, Wallace Whiting