The adipic acid plant described in Examples 6.11 and 6.12 is to be built in China, with a location factor of 0.85. Up to 45% of the total investment can be secured as a low-cost loan at an interest rate of 1%.

1. What is the cost of capital if the cost of equity is 40%?
2. What is the NPV for 15 years of production?
3. What is the IRR if the debt must be amortized over 15 years as a fixed cost of production?

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Adipic acid is used in the manufacture of nylon 6,6. It is made by hydrogenation of phenol to a mixture of cyclohexanol and cyclohexanone (known as KA oil-ketone and alcohol), followed by oxidation with nitric acid. The overall reaction can be written approximately as: C6H5OH+2H₂ → C6H100 - C6H100+H₂-C6H₁1OH C6H11OH + 2HNO3 → HOOC(CH₂)4COOH + N₂O + 2H₂O The actual process requirements of phenol, hydrogen, nitric acid and utilities and consumables have been determined to be: Material Phenol Hydrogen Nitric acid (100% basis) By-product off gas Various catalysts and chemicals Electric power Cooling water HP steam MP steam Boiler feed water Amount 0.71572 0.0351 0.71778 0.00417 32.85 0.0939 56.1 0.35 7.63 0.04 Units lb/lb product lb/lb product lb/lb product lb/lb product $/metric ton product kWh/lb product gal/lb product lb/lb product lb/lb product gal/lb product These yields were taken from Chem Systems PERP report 98/99-3 Adipic acid (Chem Systems, 1999). The nitric acid consumption is given on a 100% basis, but 60% nitric acid is used in the process. Estimate the fixed capital cost, the working capital, the cash cost of production and total cost of production for a new 400,000 metric ton per year (400 kt/y) adipic acid plant located in Northeast Asia. The prices of adipic acid, phenol, hydrogen and nitric acid have been forecasted for Northeast Asia as $1400/t, $1000/t, $1100/t and $380/t respectively. Assume a 15% cost of capital and a 10 year project life.