4.Economic details are set out below for the manufacture of several grades of same chemical. Higher purities command a premium price, but costs are higher.
Which alternative would you choose? Why? im= 0.2
DCFRR criterion is to be used!
Process
Item 1 2
Purity 95 99.5
Plant capacity (t/yr) 4000 4000
Product value ($/ton of product) 150 190
Capital cost ($/1000) 600 900
Raw material ($/t product) 50 50
Energy cost ($/t product) 15 25
Labor cost ($) 16000 25000
Maintenance 10% of capital
Overhead ($) 40000 50000
Salvage value 40000 100000
Plant life 8 years 10 years
WC = 0 tax rate = 0.5
Depreciation = S-L
Start-up = 0