Interest rate (r) till June 2017,

= (1 + ) , n= 2 (till June, for the first half of the year 2017)

= 0.0152= (1+r) 2

Hence, r = 0.752 % Till June

F = P(1 + )

F = 567772233 (1 + 0.00752) = 57,20,41,880.2 INR

An assumption must be made in this regard that the relative installation costs in the US and
Sri Lanka are approximately similar, as this difference (not unlike differences in purchasing
power of consumer goods in different countries) cannot be accurately predicted, especially
since it was further regarded that the CEPCI can be reasonably applied regardless of the
location of the plant in the globe (in the absence of any indication to the contrary).

Estimation of working capital

According to rule of thumb estimates working capital for chemical plants is generally
regarded to be 10-20% of fixed capital cost (Sinnott, Coulson & Richardson's Chemical
Engineering Volume 6 (Chemical Engineering Design), 1999).

Results from relatioship1.3 can be used to obtain fixed capital estimates.

Working capital requirement = 10-20% of Fixed capital (1.3)

= 20% 572041880.2 = 11,44,08.376 INR

The total investment required initially can be estimated based on the approximations made
above:

Total initial investment = Fixed total capital + working capital (1.4)

= 57,20,41,880.2 + 11,44,08,376 = 68,64,50,256.2 INR

Total capital investment is therefore approximately INR 70 crore.

 Estimation of annual operating costs
Annual operating costs were mainly considered as having two components- variable costs
(costs that increase with the increase in production activity) and fixed costs (costs incurred
throughout the year regardless of production activity). The figure obtained for annual
operating costs are incurred every year and should be compared with the expected revenue
when projecting economic performance.

Note: It was assumed throughout this section that the number of working days per year was
300 (i.e. 25 days a month).

Estimation of variable costs

Raw material cost: Sulfur is the main raw material and assumed as being purchased from
CPC. The current market price was obtained online.

Cost for Sulfur(per day) = sulfur requirement(per day) X price

120 MTPD X 1300 = 156000

Anuual cost for main raw material = 156000 X 300 = 468000006

Cost for water was assumed to be negligible.

Miscellaneous materials (plant supplies): This includes safety equipment, instrument

chart and accessories, pipe gaskets and cleaning materials of the plant. As a rough guide,
this cost can be approximated from the maintenance cost which it self is approximated as a
fraction of the total fixed cost (Sinnott, Coulson & Richardson's Chemical Engineering
Volume 6 (Chemical Engineering Design), 1999).
Miscellane