Example 10.1 A new chemical plant is going to be built and will require the following capital invest- ments (all figures are in $ million): Cost of land, L= $10.0 Total fixed capital investment, FCI, - $150.0 Fixed capital investment during year 1 = $90.0 Fixed capital investment during year 2 - $60.0 Plant start up at end of year 2 Working capital = $30.0 at end of year 2 The sales revenues and costs of manufacturing are given below: Yearly sales revenue (after start-up), R = $75.0 per year Cost of manufacturing excluding depreciation allowance (after start-up), COM, = $30.0 per year Taxation rate, 45% Salvage value of plant, S = $10.0 Depreciation: Use 5-year MACRS. Assume a project life of 10 years. Calculate each nondiscounted profitability criterion given in this section for this plant. Example 10.1 A new chemical plant is going to be built and will require the following capital invest- ments (all figures are in $ million): Cost of land, L= $10.0 Total fixed capital investment, FCI, - $150.0 Fixed capital investment during year 1 = $90.0 Fixed capital investment during year 2 - $60.0 Plant start up at end of year 2 Working capital = $30.0 at end of year 2 The sales revenues and costs of manufacturing are given below: Yearly sales revenue (after start-up), R = $75.0 per year Cost of manufacturing excluding depreciation allowance (after start-up), COM, = $30.0 per year Taxation rate, 45% Salvage value of plant, S = $10.0 Depreciation: Use 5-year MACRS. Assume a project life of 10 years. Calculate each nondiscounted profitability criterion given in this section for this plant