ChE 510 Engineering Economics for Chemical Engineers

Original, Well-Described, and Solved Chemical Engineering Economy Problems

1. Astorage tank containing corrosive liquids,has been designed. If the tank ismade of mild
steel, the initial installed cost will be P50,000, and the useful-lifeperiod will be 3 years. Since
stainless steel is highly resistant to the corrosive actionof the liquids, stainless steel, as the
material of construction, has been proposed asan alternative to mild steel. The stainless-steel
tank would have an initialinstalled cost of P150,000. The scrap value at the end of the useful life
would bezero for both type of material, and could be replaced at a cost equal to 50% plus
theoriginal price. On the basis of equal capitalized costs for both types,what should be the
useful-life period for the stainless-steel tank if money is worth 6% compounded annually?
for the mild steel tank

1+0.06 31

P50,0001.5
capitalized cost=

for the stainless steel tank

1+0.06 n1

P150,0001.5
capitalized cost=

n=9.79 10 years

2. A bond has a maturity value of P43,000 and is paying discrete compound interest at an
effective annual rate of 3.45 percent. Determine the following at a time four years before the
bond reaches maturity value:(a) Present worth.(b) Discount.(c) Discrete compound rate of
effective interest which will be received by a purchaser if the bond were obtained for P30,100.
(d) Repeat part (a) for the case where the nominal bond interest is 3.45 percent compounded
continuously.
(a) Present worth
n

1+i

1+0.0345 4

F
P=

(b) Discount

Discount=FP=43000P 37,544.5130=5455.4870

(c) if P=30100 and F=43000

1+i n

F
P=
1+i 4

43000
30100=
i=0.09327 9.33
(d) if compounded continuously

P=

F
43000
= (0.0345)(4 ) =P 37,457.2438
e e

3. Cycle time for maximum amount of production from a batch processing of gold electroplating
process. Tests with the electroplating bath, operated at constant current, have shown that the
relation between the amount of metal deposited and time in the bath can be represented as
follows:

M 2=2.25 x 1 04 (t +0.11)
where M = g of gold deposited in t hours.
The plated metal in each batch must be washed with an amount of water equal to 1/16 times the
amount of metal deposited per batch. The washing rate remains constant and is equal to of
the metal deposited rate at the end of the dipping process. The time required per batch cycle for
replenishing the solutions is 1 hour. Under the conditions where the preceding information
applies, determine the total batch cycle time necessary to permit the maximum output of filtrate
during each 24 h.
Let t = hours of dipping time per batch
mass of gold deposited per batch is

t+ 0.11 1/ 2 f t 3
M =150
mass of gold deposited rate at the end of the dipping process is
1 /2

t+ 0.11

f t /h
dM 150
Washing rate x 4=
=

dt
2
time for washing

Time for washing=

volume of wash water

washing rate

1 /2

t +0.11

t+0.11 1/ 2

(16)(150)
(4 )(2)(150)

total batch time

t +0.11
+1=1.5 t+ 1.055
2

Total time per cycle=t+

cycles per 24 h

Cycles per 24 h=

24
1.5 t+ 1.055

mass of gold in g deposited / 24 h is

24
1.5 t + 1.055
M ( cycles per 24 h )=150
t +0.11 1 /2

at optimum batch cycle time giving the maximum output of amount deposited per 24h,

dM (cycles per 24 h)
=0
dt
Performing the differentiation and solving for t,

1.5 t+1.055 1
t+0.11 1/2
M ( cycles per 24 h )=3600

1.5 t +1.055 (1.5)=0

t +0.11 1 /2
1.5t +1.055 1+ 3600
t+0.11 1/2 (1)
dM (cycles per 24 h)
1
=3600

dt
2

()

1.5 t+1.055 2 (1.5)

t+ 0.11 1/ 2
1
1.5 t+1.055 =3600
1/ 2
t+ 0.11 (1)
1
3600

()

1.5 t+1.055=(1.5)(2)(t+0.11)
1.5 t+1.055=3 t+0.33
3 t1.5t =1.0550.33
1.5 t=1.0550.33
t=

1.0550.33
=0.4833 h
1.5

Total cycle time necessary to permit the maximum output of metal deposit is

t T =1.5 t+ 1.055
t T =1.5( 0.4833)+1.055
t T =1.78 h

Kate Chonalyn Y. Uy
1. A new heat exchanger is required in conjunction with a rearrangementof existing facilities.
Because of corrosion, the expected life of a carbonsteel heat exchanger is 5 years. The
installed cost is P10,000. An alternative to the heat exchanger is a unit fabricated of AISI type
316 stainless steel, with an installed cost of P27,000 and an estimated life of 15 years,to be
written off in 11 years. The minimum acceptable interest rate is 10percent, the tax rate is 48
percent, and the depreciation method isstraight line. Determine which unit would be more
economical based onannual costs.
for the carbon steel
EOY

BTCF

dk

10000
0

200
0
200
0
200
0
200
0
200
0

taxabl
e
incom
e
-

cash flow
for income
tax

ATCF

-10000

-2000

960

960

-2000

960

960

-2000

960

960

-2000

960

960

-2000

960

960

total
PW(10%)

-5200
6360.8
4
1677.9

AW

7
for the stainless steel
EOY

BTCF

dk

taxable
income

cash flow for

income tax

ATCF

27000

-27000

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

2454.5
45

1178.182

1178.1
82

10

2454.5
45

1178.182

1178.1
82

11

2454.5
45

1178.182

1178.1
82

2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5
2454.5
5

12

Total

13

PW(10%)

14

AW

15

-14040
19347.
6
2978.8
2

The carbon steel heat exchanger is a cheaper solution.

2. A famous firm is about to begin their new pilot plant operation on a process it has developed.
One item of optional equipmentthat could be obtained is a vacuum pump unit. The company
finds that a unit now available for P40,000 could be used in other sub-company operations. It is
estimated that the vacuum pump unit will be worth P45,000 at the end of 9 years.If the firm
believes 20% is an appropriate rate of return, what annual benefit is needed to justify the
purchase of the vacuum pump unit?

40,000( A / P ,20 ,9)=A +45,000( A / F , 20 , 9)

1+ 0.20 9 (0.20)

1+ 0.20 91
1+ 0.20 91
()
0.20

()= A+ 45,000

40,000
A=P 7759.60