Problem #4: (Incremental ROI and DCFRR Analysis - Alternative Investments) Economic details are set out below for the manufacture of several grades of the same chemical. Higher purities command a premium price, but costs are higher. Item Process A Process B Purity 95 99.5 4000 4000 600 900 50 15 25 Plant capacity (ton/yr) Product value ($/ton of product) Fixed Capital cost ($/1000) Raw material ($/ton product) Energy cost ($/ton product) Labor cost ($) Maintenance Overhead ($) Salvage value Plant life 16,000 10% of capital 40,000 40,000 25,000 10% of capital 50,000 60,000 10 years 0.20 7 years DCFRR 0.22 Tax Rate = 0.35 Common data Working Capital = 0 Depreciation - Straight-Line Dep. With life of 7 im = 0.15 Start-up = 0.0 i) What are the product prices 'X' and 'Y' for processes A and B? Which process would you choose if you used incremental ROI (AROI) as the criterion? Determine whether we should choose process A or B. What is incremental DCFRR (ADCFRR)? ii) Problem #4: (Incremental ROI and DCFRR Analysis - Alternative Investments) Economic details are set out below for the manufacture of several grades of the same chemical. Higher purities command a premium price, but costs are higher. Item Process A Process B Purity 95 99.5 4000 4000 600 900 50 15 25 Plant capacity (ton/yr) Product value ($/ton of product) Fixed Capital cost ($/1000) Raw material ($/ton product) Energy cost ($/ton product) Labor cost ($) Maintenance Overhead ($) Salvage value Plant life 16,000 10% of capital 40,000 40,000 25,000 10% of capital 50,000 60,000 10 years 0.20 7 years DCFRR 0.22 Tax Rate = 0.35 Common data Working Capital = 0 Depreciation - Straight-Line Dep. With life of 7 im = 0.15 Start-up = 0.0 i) What are the product prices 'X' and 'Y' for processes A and B? Which process would you choose if you used incremental ROI (AROI) as the criterion? Determine whether we should choose process A or B. What is incremental DCFRR (ADCFRR)? ii)