Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Profitability Analysis (Reference: Peters, Timmerhaus, West in Plant Design and Economics for Chemical Engineers 5 th Ed.) A process, projected to have a total depreciable

Profitability Analysis (Reference: Peters, Timmerhaus, West in Plant Design and Economics for Chemical Engineers 5th Ed.)

A process, projected to have a total depreciable fixed capital investment of $100 million, with no allocated cost for off-site utilities, is to be installed over a 3-yr period (2018-2020). Just prior to start-up, $30 million of working capital is required. At 100% production capacity (projected for the third and subsequent operating years), sales revenues are projected to be $130 million/ yr. and the total annual production cost, excluding depreciation, is to be $ 90 million/yr. Also, the plant is subjected to operate at 50% and 75% of full annual capacity during the first and second operating years. Thus, during those years, revenues are anticipated to be 50% and 75% of the sales revenues projected in the third and subsequent years, respectively. Operating expenses in Y1 and Y2 are 75% of that in Y3. Using the straight-line method to calculate for depreciation. Perform a 10 year-period analysis and compute for the ROI and PBP.

Dear Prof., if you are going to use a spreadsheet, please provide the necessary formula and complete solution.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Process To Profits Strategic Planning For A Growing Business

Authors: William Lasher

1st Edition

0324223870, 9780324223873

More Books

Students also viewed these Finance questions