plant design

A group of investors is considering starting a premixed-concrete plant in a rapidly developing area. The group believes that there will be a good market for premixed concrete in this area for at least the next 10 years. The investors believe that the plant could operate at about 75% of capacity 250 days per year. The plant will cost $100,000 and it would have a capacity of 72 cubic meters of concrete per day. Its salvage value at the end of 10 years is estimated to be $20,000, which is the value of the land. To deliver the concrete, four trucks would be required, costing $8,000 each, having an estimated life of 5 years and a trade-in value of S500 each at the end of that time. In addition to the four truck drivers, who would be paid $50 per day each, four people would be required to operate the plant and office, at a cost of $175 per day. Annual operating and maintenance costs for the plant and office are estimated at $7,000 and for each truck at $2,250, both in view of 75% capacity utilization. Raw-material costs are estimated to be $27 per cubic meter of concrete. Payroll taxes, vacations, and other fringe benefits would amount to 25% of the annual payroll. Taxes and insurance on each truck would be $500, and taxes and insurance on the plant would be $1,000 per year. The investor would not contribute any labor to the business, but a manager would be employed at an annual salary of $20,000. Delivered, premixed concrete is selling for an average of 845 per cubic meter. A useful life of 10 years is expected, and capital invested elsewhere by these investors is earning about 15% before income taxes. It is desired to find the annual worth for the expected conditions and to perform sensitivity studies for certain variables. Calculate: a. Annual Revenue b. Total Annual Costs i. Capital Recovery Labor iii. Payroll Taxes iv. Taxes and Insurance Operation and Maintenance vi. Materials c. Net Annual Worth (at 75% capacity) d. Net Annual Worth at 50%, 65% and 90% Capacity (Can be done on excel) e. Net Annual Worth (at 75% Capacity) if Selling Price decreases by 3%, 5% and 10% (Can be done on excel) V