In the month of March 2018, an engineer interested in building a plant to obtain a chemical product developed a process by which he obtains from a raw material Z a mixture that contains 85% of product A and 15% of product B that can be totally separated and purified each of them.

He calculated that the fixed investment for the installation of a plant with a capacity of 5,000 tons per year without including land amounted to $ 30,000,000 of which $ 20.0 million corresponded to machinery and equipment (process and services), $ 7.5 million pesos to civil works and $ 2.5 million to cover the previous and indirect expenses of the plant (engineering, supervision, construction administration, etc).

The developed process does not use high pressures or temperatures, it can be considered as a simple average technology within the chemical industry.

The process requires 1.1 tons of raw material to obtain 1.0 tons of product mixture, 500 kwh per ton of mixture obtained, 20 liters of diesel per ton of mixture obtained and 150 liters of water per ton of mixture obtained.

The products are packed in 50 kg capacity containers.

The process requires 10 mid-level technicians and 2 supervisors for its operation.

Due to personal problems, the engineer could not carry out the project, but because the market for the product has grown faster than originally estimated, he has decided to review the current feasibility of the project, for which he requests the calculation of the total investment and the breakeven point on the following conditions:

Annual production capacity: 6,250 tons.

Shelf life: 20 years.

Expected sales volume for the first year of operation: 5,000 tons.

Selling price: $ 11,500 / ton of product A and $ 12,000 / ton of product B.

Annual fixed production costs and expenses including direct and indirect labor excluding depreciation are estimated at $ 2.2 million, plus 7.5% of the initial fixed investment for maintenance and insurance.

Annual administration expenses are estimated at $ 760,000.00 and sales at $ 1,400,000.00

Similar chemical industries maintain an integrated working capital