Estimation of total capital investment and production cost

ESTIMATION OF TOTAL CAPITAL INVESTMENT AND PRODUCT COST:

For this cost estimation we assumed the current exchange: 1$=57.48 TK.

Fig: Cost Index Vs. Year

1600 1400 1200 y = 32.629x - 63961

Cost Index

1000 800 600 400 200 0 1970

1975

1980

1985

1990

1995

2000

2005

Year

Marshall and swift installed equipment index

Year 1990(Jan) 2001(July)

Process industry 924 1350 (From graph)

Cost data on table 25-49 of Perrys chemical engineering handbook (6th edition) is based on Marshall swift index of 1000.

Capacity of new equip. Cost of equipment(New)= Cost of equip.(Old) ( Capacity of Old equip.

)n

Index value of present time Present cost= Original cost ( ) Index value at time original cost was obtained

COST OF EQUIPMENY:
Table-1: Cost for pump

Equipment Identifi

Quant Expone Capacity Source U.S. $

Taka

name

cation no.

ity

nt

(unit)

Million

Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump Pump

P-101 P-102 P-103 P-104 P-105 P-106 P-107 P-108 P-109 P-110 P-111 P-112 P-113 P-114 P-115 P-201 P-202 P-203 P-204 P-205 P-206 P-207

1 1 1 1 1 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

7.5 hp 7.5 hp 7.5 hp 7.5 hp 7.5 hp 7.5 hp 7.5 hp 3 hp 7.5 hp 10 hp 3 hp 7.5 hp 3 hp 10 hp 5 hp 3 hp 3 hp 3 hp 3 hp 3 hp 3 hp 3 hp

Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry

2362.4 2362.4 2362.4 2362.4 2362.4 2362.4*2 2362.4*2 1661.7*2 2362.4 2575.4 1661.7 2362.4 1661.7 2575.4 2000 1661.7 1661.7 1661.7 1661.7 1661.7 1661.7 1661.7

0.1358 0.1358 0.1358 0.1358 0.1358 0.2716 0.2716 0.1910 0.1358 0.1480 0.0955 0.1358 0.0955 0.1480 0.1150 0.0955 0.0955 0.0955 0.0955 0.0955 0.0955 0.0955 2.9553

TOTAL PUMP COST=

Table-2: Cost of different type vessel:

Equipment name

Identific ation no.

Quantit Sourc U.S. $ y 1 1 e Perry Perry 14904*2 13010

Taka (Million) 1.71336 0.7478

NaOH Storage tank Coconut tank oil storage tank oil storage tank Water storage tank Blender Demoisturizer tank Bleacher tank Filtrated storage tank Saponifier pan Divided pan unit oil

VE-101

storage VE-102

VE-103 VE-104 VE-105 VE-106 VE-107 VE-108 VE-109 VE-110 VE-111

1 1 1 2 2 3 2 4 2 2

Perry Perry Perry Perry Perry Perry Perry Perry Perry Perry

13010 13010 6505 14352*2 14904*2 7590*3 7716*2 146302*4 8352*2 162507*2

0.7478 0.7478 0.374 1.650 1.713 1.308 0.887 33.63 0.960 18.68

Batch fitting & settling VE-112 tank First treatment tank Filtrated storage tank Second treatment tank Filtrated storage tank Brine preparation tank VE-201 VE-202 VE-203 VE-204 VE-205

1 1 1 1 1

Perry Perry Perry Perry Perry

13800 14352 13800 14352 8280

0.793 0.825 0.793 0.25 0.476

TOTALVESSEL COST=

66.291

Table-3: Cost of Heat Exchanger:

Equipment name 1st Soap Heater 2nd Soap Heater Soap dryer First effect body Second effect body Finisher Packed

Identificati on no. HE-101 HE-102 DA-101 EV-201 EV-202 EV-203

Quant Source ity 1 1 1 1 1 1 1 Perry Perry Perry Perry Perry Perry Perry

U.S. $

Taka Million

2505.3 2505.3 7300 15500 15500 19375 25860

0.144 0.144 0.4196 0.8909 0.8909 1.1136 1.4864

bed D-201

distillation column Boiler Barometric condenser Barometric condenser TOTAL Cost of Heat Exchanger= 7.1874 BC-202 9482 0.545 B-101 BC-201 1 Perry 17532 9482 1.008 0.545

Table-4: Cost of other equipment:

Equipment name

Identification Quantity Source U.S. $ no.

Taka Million

Plate&Filter press FL-101 Plate press Plate press & Filter FL-202 & Filter FL-201

2 1

Perry Perry

3577*2 3577

0.2056 0.2056

Perry

3577

0.2056

Ejector Ejector Ejector Centrifuge

EJ-101 EJ-201 EJ-202 CE-201

1 1 1 1

Perry Perry Perry Perry

2533 2533 2533 6900

0.1455 0.1455 0.1455 0.3966 1.450

TOTAL Cost of other equipment=

TOTAL EQUIPMENT COST =2.9553+66.291+7.1874+1.45 =77.8827 Taka(million)

ATTACHMENT: 1
For, P-101 Capacity=7.5 Given capacity=10 From 25-49 (Perry) N=0.3 SO cost pf equipment= $1.1103(7.5/10)0.3 =$1750 Present cost =1750(1350/1000) =$2362.4 Cost for P-101 =2362.457.48 Tk. =12946 Tk.

ATTACHMENT: 2 For, Saponifier pan ,VE-110 Capacity=43.3 m3 Given capacity=0.38 m3 From 25-49 (Perry) N=0.43 SO cost of pan= $5300(40.3/0.38)0.43 =$ 40612.406 Present cost =40612.406 *4(1350/1000) =$146302

TABLE: ESTIMATE OF CAPITAL INVESTMENT (For solid-fluid processing plant)

Items Direct cost Purchased equipment Purchased equipment installation Instrumentation and Control Piping (installed) Electrical (installed) Building Yard Improvement

Factor Cost Million(Tk.)

1 0.39 0.13 0.31 0.1 0.29 0.1

77.8827 30.374253 10.124751 24.143637 7.78827 22.585983 7.78827

Service Facilities Land Total direct plant cost

0.55 0.06

42.835485 4.672962 228.196311

Indirect cost Engineering & Supervision Construction & Expenses Total direct & Indirect cost 0.32 0.34 24.922464 26.480118 279.598893

Contractor's fee Contingency Fixed Capital Investment

0.18 0.36

14.018886 28.037772 321.655551

Working Capital Investment Total Capital Investment

0.74

57.633198 379.288749

Location factor for Bangladesh Fixed Capital Investment Total Capital Investment

1.8 578.98 682.719

MANUFACTURING EXPENCES: Assume plant operate 330 day/yr. Given, Production rate 40 ton/day So, 330 40=13200 ton/yr.

COST TYPE ITEM

COST/UNIT

COST/Yr (Tk.Million)

DIRECT

RAW MATERIAL Coconut oil Palm oil Caustic soda NaCl Salt Other chemical Operating labor (10%raw material) 80 Tk/Kg 35 Tk/Kg 30 Tk/Kg 5 Tk/Kg 171.072 299.376 204.64 1.092 2.39 67.857

Supervisory & clerical labor (10% of operating 6.7857 labor) UTILITIES Electricity Steam Demin. water Waste disposal 2.65Tk/(Kw-h) 0.18 Tk/Kg 0.0085Tk/Kg 0.095Tk/Kg 0.22 4.74 12.00

Maintain & repair (2%of fixed capital)

Operating expenses (10% of maintain Tk/Kg & 0.474 repair Laboratory charges (10% of operating labor) Total annual direct manufacturing expenses INDIRECT = 6.785 777.346

Overhead, Packing, Storage (50% of operating labor plus supervision & maintenance Local taxes (4% of fixed capital) Insurance (0.4% of fixed capital) 36.298 9.489 0.9485 = 46.735

Total annual indirect manufacturing expenses

Total annual manufacturing expenses GENERAL EXPENSES Administrative cost (2.5% of O/H)

824.0815 0.907

Distribution of selling cost (10% of total 82.408 expenses) Research & development (5% of Total expenses) 41.204 45.5146 994.1095

DEPRICIATION (straight line method for 15 yr. Service life) Total annual expenses=

Total expenses or Total production cost (ATE) = 994.1095 Tk.(Million) Annual revenue (AR) 92857 Tk/ton =1225.714 =231.6045 =69.48

Gross annual profit (AR-ATE) Income tax on gross profit (30%) AIT

Net annual profit after tax (ANP=AGP-AIT) =162.1186Tk.(Million)

% Profit =162.1186100/994.1095 =16.3

CAPITAL INVESTMENT

Total capital investment for the plant is=682.719 Tk. (Million)

PRODUCTION COST Production cost == 994.1095 106/13200 Tk./ton = 75311.326 Tk./ton

Economic analysis
ECONOMIC EVALUATION: # Calculation of internal of rate of return:
Total income = Total sales Total production cost =(1225.714 994.1095) Tk. (million) =231.60 Tk. (million)

Tax on Income = 30%

Net profit after tax = 231.6(1-0.3) Tk. (million) =162.1186 Tk. (million)

So, Percent rate of return =Profit after tax/ Total capital investment
162.1186 100 682.719

=23.7 %

# Calculation for payout period (without interest)

Depreciation of FCI:

Project life =15 yr. Straight line method, depreciation = depreciable FCI / project life

578.98 = 38.59 Tk. (million) 15

FCI Payout period (without interest)= (Average profit + Depreciation)/y

682.719 162.1186 + 38.59

=3.4 yr.

So, Payout period of the estimated project is 4 yr.

#Calculation for IRR (discount cash flow method)

net income /yr W.C

FIC + W.C

15 yr

Let IRR = I % We know, Present worth = (net income/yr)(P/A, I%, 15) + (Salvage value + W.C)(P/F, I%, 15) - FCI
(1 + I )15 1 1 + 57.6331 - 682.719 =0 15 I (1 + I ) (1 + I )15

162.1186

By trail & error method IRR = 22.7 %

# Calculation for NPV with M.A.R.R. = 15 %

Net present worth = (net income/yr)(P/A, I%, 15) + (Salvage value + W.C)(P/F, I%, 15) - FCI

1 (1 + .15)15 1 + 57.6331 - 682.719 =162.1186 (1 + .15)15 I (1 + .15)15

=272.33 Net present worth is positive

So, The investment is economically accepted.