Econs

HBN Corp. is analyzing the economic performance of the proposed processes condition in Q1a. Option A - Process A is proposed as the process without recycling stream. Option B - Process B is proposed as the process with recycling stream. Based on projection from previous processing plant, approximately 2,000 ton per annum of ethanol can be produced in Process A once the processing plant is built. Process A required HBN Corp. to invest fixed capital of RM 1.0 million inside battery limit and RM 1.0 million outside battery limit. The process and plant overhead are approximately RM 200,000 per annum. On the other hand, production in Process B can only be started 1 year after the Process A production started due to the long lead time of purchasing and procurement of equipment for recycling. Process B required an investment of inside battery limit of RM 1.2 million and outside battery limit of RM 0.6 million. The process and plant overhead are approximately RM 140,000 per annum. Process B is capable of processing 3,800 ton per annum of ethanol. Both Process A and B require major maintenance every 2 years of operation, which each maintenance requires RM 70,000 and RM 90,000 for Process A and Process B, respectively. The selling price of ammonia is RM 0.2 per kg, It is estimated that both market for the products produced from Process A and Process B is available for further 15 years after process B becomes available. a) Generate the cash flow table and net present value table of Project A and B over the project period. Assume the cost of capital of 14% per year is used to fund 30% of all capital of project and loan interest rate is 12% per year. The MARR is 10% above the WACC (20 marks) b) Based on your findings in Q2(a), select a better process configuration based on the sustainability aspects. Justify your answer using the three aspects of sustainability. (10 marks) HBN Corp. is analyzing the economic performance of the proposed processes condition in Q1a. Option A - Process A is proposed as the process without recycling stream. Option B - Process B is proposed as the process with recycling stream. Based on projection from previous processing plant, approximately 2,000 ton per annum of ethanol can be produced in Process A once the processing plant is built. Process A required HBN Corp. to invest fixed capital of RM 1.0 million inside battery limit and RM 1.0 million outside battery limit. The process and plant overhead are approximately RM 200,000 per annum. On the other hand, production in Process B can only be started 1 year after the Process A production started due to the long lead time of purchasing and procurement of equipment for recycling. Process B required an investment of inside battery limit of RM 1.2 million and outside battery limit of RM 0.6 million. The process and plant overhead are approximately RM 140,000 per annum. Process B is capable of processing 3,800 ton per annum of ethanol. Both Process A and B require major maintenance every 2 years of operation, which each maintenance requires RM 70,000 and RM 90,000 for Process A and Process B, respectively. The selling price of ammonia is RM 0.2 per kg, It is estimated that both market for the products produced from Process A and Process B is available for further 15 years after process B becomes available. a) Generate the cash flow table and net present value table of Project A and B over the project period. Assume the cost of capital of 14% per year is used to fund 30% of all capital of project and loan interest rate is 12% per year. The MARR is 10% above the WACC (20 marks) b) Based on your findings in Q2(a), select a better process configuration based on the sustainability aspects. Justify your answer using the three aspects of sustainability. (10 marks)