For the following problems, unless stated otherwise, you may assume that the cost of land, L, and

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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)Year after Startup Yearly After-Tax Cash Flow ($10%/y) 1 7.015 2 3 4 5 6 7 8 9 10 6.206 6.295 6.852 6.859

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?

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Analysis Synthesis And Design Of Chemical Processes

ISBN: 9780134177403

5th Edition

Authors: Richard Turton, Joseph Shaeiwitz, Debangsu Bhattacharyya, Wallace Whiting

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