Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6) A plastic-manutacturing company owns and operates a polypropylene production facility that converts the propylene from one of its cracking facilities to polypropylene plastics for

image text in transcribed
6) A plastic-manutacturing company owns and operates a polypropylene production facility that converts the propylene from one of its cracking facilities to polypropylene plastics for outside sale. The polypropylene production facility is currently forced to operate at less than capacity due to an insufficiency of propylene production capacity in its hydrocarbon cracking facility. The chemical engineers are considering alternatives for supplying additional propylene to the polypropylene production facility. Two feasible alternatives are to build a pipeline to the nearest outside supply source and to provide additional propylene by truck from an outside source. The engineers also gathered the following projected cost estimates Future costs for purchased propylene excluding delivery: $0.5/kg. Cost of pipeline construction: S100,000/km (pipeline). Estimated length of pipeline: 250 km. Transportation costs by tank truck: 10c/kg, utilizing a common carrier. Pipeline operating costs: $0.01/kg, excluding capital costs Projected additional propylene needs: 100 Gg per year Projected project life: 25 years. Estimated salvage value of the pipeline: 10% of the installed costs. e Determine the propylene cost per kilogram under each option if the firm's MARR is 20%. Which option is more economical

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

2001 Miller Local Government Audits

Authors: Rhett D. Harrell

1st Edition

015607219X, 978-0156072199

More Books

Students also viewed these Accounting questions

Question

Rework Exercise 16.5 by using the signed-rank test.

Answered: 1 week ago