WELCOME to Cost & Evaluation Workbook

accompanying Plant Design and Economics for Chemical Engineers, 5th edition,
by Peters, Timmerhaus and West.
These spreadsheets are made available for convenient implementation of methods
presented in the text. The sheets are color coded to assist the user. A hypothetical
example, 'Illustration 101', is included. The basis for all costs is Jan. 2002.
Steps to follow:
1. Please download the workbook to your computer.

2. The sheets are intended for use in the sequence presented. However, any sheet
may be by-passed so long as the information skipped is input manually where needed
in subsequent sheets. Default values may be replaced by the user.

3. Purchased Equipment Costs may be obtained from the file "Equipment Costs,"
the graphs in the text, or otherwise, and entered manually into cell H12 on the
Capital Inv.' spreadsheet.

4. On the sheet 'Capital Inv.' enter the estimated current total purchased cost of the
process equipment. For the proposed plant type, copy the corresponding "Fraction of
delivered equipment" column entries into the tan "User…" column. The sheet then
calculates and transfers results to appropriate subsequent sheets.

5. On the sheet 'Materials & Labor' enter the product prices and flowrates, the raw
materials prices and flow rates, and the labor requirements and current ENR labor index.

6. On the sheet 'Utilities' the quantity of each utility needed annually must be entered
in appropriate units. The total annual utilities cost is transferred to sheet 'Annual TPC'.

7. The 'Depreciation' sheet is used only if the user wishes to change the default
(5-year MACRS) depreciation method. To make a change, copy the appropriate MACRS
row to the 'Annual depreciation" row of sheets 'Evaluation' and 'Year-0 $', or, enter
constant annual (straight line) value into depreciation row of those sheets.

8. On the 'Annual TPC' sheet, all values are calculated from information available on
other sheets. The user may change defaults or enter preferred values. The calculated
annual TPC is transferred to 'Evaluation'.

9. The sheet 'Evaluation' uses values from other sheets to calculate the common
profitability measures. The user may change defaults, or enter desired values
into the sheet. In particular, the user may change the default inflation rates in
order to study their effects on profitability.
All calculations in 'Evaluation' are made in current (i.e. inflated) dollars. Inflation
adjustments are made from the time of the estimates.
To make evaluations for periods of less than 10 years, leave unneeded columns blank.
For periods greater than 10 years, insert columns as needed and copy from an existing
year column into the new columns. Check equations for correct cell references.

10. A second evaluation sheet, 'Year-0 $', also is included. It is the same as
sheet 'Evaluation', except that all the inflated $ values are converted to constant,
year-0 dollars (as discussed in the text). This method is considered to reflect more
realistically the effect of inflation on the profitability measures. The user may change
the default inflation rates in order to study their impacts on profitability.
ESTIMATION OF CAPITAL INVESTMENT BY PERCENTAGE OF DELIVERED EQUIPMENT METHOD
(See Table 6-9)
The fractions in the cells below are approximations applicable to typical chemical processing
plants. These values may differ depending on many factors such as location, process type, etc.
Required user input Default Subtotal Result
Required, from a linked sheet or entered manually Notes & comments
Project Identifier: Illustration 101 Fraction of delivered equipment User: copy Calculated
Solid- Solid-fluid Fluid from values values,
processing processing processing at left or million $
plant plant plant insert
Direct Costs
Purchased equipment, E' 8.800
Delivery, fraction of E' 0.10 0.10 0.10 0.10 0.880
Subtotal: delivered equipment 9.680
Purchased equipment installation 0.45 0.39 0.47 0.47 4.550
Instrumentation&Controls(installed) 0.18 0.26 0.36 0.36 3.485
Piping (installed) 0.16 0.31 0.68 0.68 6.582
Electrical systems (installed) 0.10 0.10 0.11 0.11 1.065
Buildings (including services) 0.25 0.29 0.18 0.18 1.742
Yard improvements 0.15 0.12 0.10 0.10 0.968
Service facilities (installed) 0.40 0.55 0.70 0.70 6.776
Total direct costs 1.69 2.02 2.60 2.60 34.848

Indirect Costs
Engineering and supervision 0.33 0.32 0.33 0.33 3.194
Construction expenses 0.39 0.34 0.41 0.41 3.969
Legal expenses 0.04 0.04 0.04 0.04 0.387
Contractor's fee 0.17 0.19 0.22 0.22 2.130
Contingency 0.35 0.37 0.44 0.44 4.259
Total indirect costs 1.28 1.26 1.44 1.44 13.939

Fixed capital investment (FCI) 48.787 Sent to 'Evaluation' and

'Year-0 $', there adjusted
as described below
Working capital (WC) 0.70 0.75 0.89 0.89 8.615

Total capital investment (TCI) 57.402

The investments are made over a period of time. This is represented on the basis that startup
(time 0) will be three years after the date of the estimate, that 15% of the fixed capital investment
is spent in the year beginning at the time of the estimate (year ending at time -2), 35% in the
second year (ending at -1), and 50% in the third year (ending at time 0). These values may be
changed. The amounts are inflated at the beginning of each year after the estimate, by the default
construction inflation rate. These changes are all made in the sheets 'Evaluation' and 'Year-0 $'.
It is assumed that all working capital is spent at time 0.
ANNUAL RAW MATERIAL COSTS AND PRODUCTS VALUES ANNUAL OPERATING LABOR COSTS
Process Identifier: Illustration 101 Process Identifier: Illustration 101
Required user input Notes & comments Required user input Notes & comments
Default, may be changed Default, may be changed
RESULT RESULT
Products, Coproducts and Byproducts Operating Labor
Name of Price, Annual Annual Number of Shifts per Operator Annual
Material $/kg Amount, value of operators per day** rate, $/h # operating
million product, shift* labor cost,
kg/y million $/y million $/y
Main 1.60 30.000 48.00 3 3 33.67 0.885 Sent to 'Annual TPC'
Byproduct 0.25 12.000 3.00 *See Tables 6-13 and Fig. 6-9.
0.00 **Default = 3 for continuous process.
0.00 Enter appropriate value for batch operation.
0.00 #
To obtain current, local value, enter (latest local
0.00 ENR skilled labor index)/6067 = 1
Total annual value of products = 51.00 Sent to 'Evaluation'
and 'Year-0 $'

Raw Materials
Name of Price, Annual Annual raw
Material $/kg Amount, materials
million cost,
kg/y million $/y
1 0.45 20.000 9.00
2 0.25 12.000 3.00
3 0.05 13.000 0.65
0.00
0.00
0.00
Total annual cost of raw materials = 12.65 Sent to sheet
'Annual TPC'
 UTILITY COSTS
See Table 6-14 and Table B-1 for ranges of utility unit costs and sources of information. Default
values are rough averages and may be changed. Utility costs can differ widely with location.
Process Identifier: Illustration 101 Required user input Notes & comments
Result Default, may be changed
TOTAL UTILITY COST = 2.025 million $/y
Sent to sheet 'Annual TPC'
Annual utility Default units Annual utility

unit cost
Default
Default
Utility requirement, in of utility cost, million
cost units
appropriate units requirement $/y
Air, compressed
Process air 0.45 $/100m3 # 100 m3#/y 0.000
Instrument air 0.90 $/100m3 # 100 m3#/y 0.000
Electricity
Purchased, U.S. average 0.045 $/kWh 1800000 kWh/y 0.081
Self-generated 0.05 $/kWh kWh/y 0.000
Fuel
Coal 1.66 $/GJ GJ/y 0.000
Fuel oil 3.30 $/GJ GJ/y 0.000
Natural gas 3.00 $/GJ 360000 GJ/y 1.080
Manufactured gas 12.00 $/GJ GJ/y 0.000
Refrigeration, to temperature
15 oC 4.00 $/GJ GJ/y 0.000
5 °C 5.00 $/GJ GJ/y 0.000
-20 oC 8.00 $/GJ GJ/y 0.000
-50 oC 14.00 $/GJ GJ/y 0.000
Steam, saturated
3550 kPa 8.00 $/1000 kg 1000 kg/y 0.000
790 kPa 6.00 $/1000 kg 40000 1000 kg/y 0.240
Exhaust (150 kPa) 2.00 $/1000 kg 1000 kg/y 0.000
Waste water
Disposal 0.53 $/m3 m3/y
Treatment 0.53 $/m3 400000 m3/y 0.212
Waste disposal
Hazardous 145.00 $/1000 kg 1000 kg/y 0.000
Non-hazardous 36.00 $/1000 kg 1000 kg/y 0.000
Water
Cooling 0.08 $/ m3 2500000 m3/y 0.200
Process
General 0.53 $/m3 400000 m3/y 0.212
Distilled 0.90 $/m3 m3/y 0.000
#
measured at 101.3 kPa and 15°C.
 DEPRECIATION
Default = 5-y MACRS. Default is in place in sheets 'Evaluation' and 'Year-0 $'.
To use a different recovery period, copy the entire row into the depreciation row of
sheets 'Evaluation' and 'Year-0 $' (add columns to these sheets as needed).
User may elect straight-line depreciation and period (d = FCI/period), and
substitute the value into the depreciation row on sheets 'Evaluation' and
'Year-0 $'.
Entry = MACRS depreciation as fraction/y of FCI
Recovery YEAR
period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
3-year 0.333 0.444 0.148 0.074
f 0.200 0.320 0.192 0.115 0.115 0.058
7-year 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045
10-year 0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.066 0.066 0.033
15-year 0.050 0.095 0.086 0.077 0.069 0.062 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.030
20-year 0.038 0.072 0.067 0.062 0.057 0.053 0.049 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.022
ANNUAL TOTAL PRODUCT COST AT 100% CAPACITY
See Figure 6-7 and 6-8
Default, may be changed Subtotal Notes & comments
User input RESULT
Required, may be calculated here, in linked worksheet, or entered manually.
Project identifier: Illustration 101
Capacity 30 106 kg per year
Fixed Capital Investment, FCI 50.114 million $
Default
Basis cost, Cost,
Item factor, user Basis
million $/y million $/y
may change

Raw materials 12.650

Operating labor 0.885
Operating supervision 0.15 of operating labor 0.885 0.133
Utilities 2.025
Maintenance and repairs 0.06 of FCI 50.114 3.007
Operating supplies 0.15 of maintenance & 3.007 0.451
Laboratory charges 0.15 of operating labor 0.885 0.133
Royalties (if not on lump-sum basis) 0.01 of co 26.674 0.267
Catalysts and solvents 0 -- 0.000
Variable cost = 19.550 Sent to 'Evaluation' and
Taxes (property) 0.02 of FCI 50.114 1.002 'Year-0 $'
Financing (interest) 0 of FCI 50.114 0.000
Insurance 0.01 of FCI 50.114 0.501
Rent 0 of FCI 50.114 0.000
Depreciation Calculated separately
Fixed Charges = 1.503
Plant overhead, general 0.6 of labor, supervis 4.024 2.415
Plant Overhead = 2.415
Manufacturing cost = 23.468
Administration 0.2 of labor, supervis 4.024 0.805
Distribution & selling 0.05 of co 26.674 1.334
Research & Development 0.04 of co 26.674 1.067
General Expense = 3.206
TOTAL PRODUCT COST WITHOUT DEPRECIATION = co = 26.674

Sent to 'Evaluation'
and 'Year-0 $'
 ECONOMIC EVALUATION CURRENT, i.e. INFLATED, DOLLARS
Project identifier: Illustration 101 Construction inflation rate, fraction/y = 0.02
Expenditures, entries must be negative Product price inflation rate, fraction/y = 0
Default values, can be changed TPC inflation rate, fraction/y = 0.02
Required, user must supply Annual-compounding discount rate, fraction/y = minimum acceptable rate of return, mar = 0.15
Required, may be calculated here, in linked Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma= 0.14
worksheet, or entered manually Income tax rate = 0.35
Comments and notes begin in column S RESULT

Row
Year ending at time -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 Sum
1. Land, 10 $ (see notes)
6
0.00 0.00 0.00 0.00 0.00
2. Fixed Capital Investment, 106$ -7.32 -17.42 -25.38 -50.11
3. Working Capital, 106$ (see notes) -8.85 8.85 0.00
4. Salvage Value, 106$ 0.00 0.00
5. Total Capital Investment, 106$ -7.32 -17.42 -34.23 -58.96
6. Annual Investment, 106$ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7. Start-up cost, 106$ -5.01
8. Operating rate, fraction of capacity 0.50 0.90 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
9. Annual sales, 106$ 25.50 45.90 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 479.40
10. Annual Total Product Cost,
-17.93 -26.76 -29.45 -30.04 -30.64 -31.25 -31.88 -32.51 -33.17 -33.83 -297.45
depreciation not included,106$
11. Annual depreciation factor, 1/y 0.20 0.320 0.192 0.115 0.115 0.058
12. Annual depreciation, 106$/y 10.02 16.04 9.62 5.77 5.77 2.89 50.11
13. Annual Gross Profit, 106$ -7.47 3.11 11.93 15.19 14.59 16.86 19.12 18.49 17.83 17.17 126.82
14. Annual Net Profit, 106$ -7.47 2.02 7.75 9.87 9.48 10.96 12.43 12.02 11.59 11.16 79.82
15. Annual operating cash flow,106$ 2.56 18.06 17.38 15.65 15.25 13.85 12.43 12.02 11.59 11.16 129.93
16. Total annual cash flow, 106$ 0.00 -7.32 -17.42 -34.23 2.56 18.06 17.38 15.65 15.25 13.85 12.43 12.02 11.59 11.16 70.97
17. Cumulative cash position, 10 $6
0.00 -7.32 -24.74 -58.96 -56.41 -38.35 -20.98 -5.33 9.92 23.77 36.20 48.22 59.81 70.97
Profitability measures, time value of money NOT included:
18. Return on investment, ave. %/y 13.5
19. Payback period, y 3.9
20. Net return, 10 $
6
-0.86 at mar = 15.0 %/y
Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting
21. Present worth factor 1.52 1.32 1.15 1.00 0.87 0.76 0.66 0.57 0.50 0.43 0.38 0.33 0.28 0.25
22. Present worth of annual cash
0.00 -9.68 -20.03 -34.23 2.22 13.65 11.42 8.95 7.58 5.99 4.67 3.93 3.30 2.76 0.53
flows, 106$
23. Net present worth, 106$ = 0.53 at discount rate= 15.0 %/y

24. Discounted cash flow rate of To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by
return, DCFR, %/y = 15.2 changing cell $C$39. Solver must be rerun after a change on any sheet.
Iterated discount rate= 0.152
25. Present worth factor 1.53 1.33 1.15 1.00 0.87 0.75 0.65 0.57 0.49 0.43 0.37 0.32 0.28 0.24
26. Present worth of annual cash
0.00 -9.71 -20.06 -34.23 2.22 13.61 11.37 8.89 7.52 5.93 4.62 3.88 3.25 2.71 0.00
flows, 106$

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting
27. Present worth factor 1.63 1.42 1.23 1.07 0.93 0.81 0.71 0.61 0.53 0.46 0.40 0.35 0.31 0.27
28. Present worth of annual cash 0.00 -10.39 -21.50 -36.74 2.39 14.65 12.26 9.60 8.14 6.42 5.02 4.22 3.54 2.96 0.57
flows, 106$
29. Net present worth, 106$ = 0.57 at discount rate= 14.0 %/y

30. Discounted cash flow rate of To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$51, to be made = 0 by
return, DCFR, %/y = 14.1 changing cell $C$49. Solver must be rerun after a change on any sheet.
Iterated discount rate= 0.141
31. Present worth factor 1.64 1.43 1.24 1.07 0.93 0.81 0.70 0.61 0.53 0.46 0.40 0.35 0.30 0.26
32. Present worth of annual cash 0.00 -10.43 -21.55 -36.77 2.38 14.62 12.21 9.55 8.08 6.37 4.96 4.17 3.49 2.92 0.00
flows, 106$
 COMMENTS & NOTES
Time -3 is default time of estimate, time -2 is the first inflation.
Land can be included, default is 0.
Time 0 is startup time.
Working capital (-) at time 0, (+) when recovered.
Salvage value is (+) at time of recovery.

Planned investments (e.g. replacements) entered here at inflated value.

Startup default is 10% of FCI.
Two year ramp-up of production.

Operating rate affects only variable part of TPC.

Depreciation default is 5-year MACRS.

Start costs subtracted here.

No income tax credit taken for losses.

=Annual operating cash flow + Annual investment

ROI, PBP and Net return do NOT include recovery amounts, by text definition.
Compare with ROI = 15.0 %/y
Compare with reference PBP = 3.6 y.
Compare with net return = 0.
NPW and DCFR include recovery amounts, by text definition.
Uses single-year present worth factor from Table 7-3.
If there is more than one sign change in the annual cash flow, check DCFR value separately.

Compare with net present worth = 0.

"No value" results from a negative total cash flow in R27.

Compare with R5.

NPW and DCFR include recovery amounts, by text definition.

Uses 1-year present worth factor from Table 7-5.
If there is more than one sign change in the annual cash flow, check DCFR value separately.

Compare with net present worth =0.

"No value" results from a negative cash flow in R26.

Compare with R6
 ECONOMIC EVALUATION CONSTANT, YEAR-0 DOLLARS
Project identifier: Illustration 101 Construction inflation rate, fraction/y = 0.02
Expenditures, entries must be negative Product price inflation rate, fraction/y = 0
Default values, can be changed TPC inflation rate, fraction/y = 0.02
Required, user must supply Annual-compounding discount rate, fraction/y = minimum acceptable rate of return, mar = 0.15
Required, may be calculated here, in linked Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma= 0.14
worksheet, or entered manually Income tax rate = 0.35
Comments and notes begin in column S RESULT

Row
Year ending at time -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 Sum
1. Land, 10 $ (see notes)
6
0.00 0.00 0.00 0.00 0.00
2. Fixed Capital Investment, 106$ -7.61 -17.77 -25.38 -50.76
3. Working Capital, 106$ (see notes) -8.96 8.96 0.00
4. Salvage Value, 106$ 0.00 0.00
5. Total Capital Investment, 106$ -7.61 -17.77 -34.34 -59.72
6. Annual Investment, 106$ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7. Start-up cost, 106$ -4.98
8. Operating rate, fraction of capacity 0.50 0.90 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
9. Annual sales, 106$ 25.00 44.12 48.06 47.12 46.19 45.29 44.40 43.53 42.67 41.84 428.21
10. Annual Total Product Cost,
-17.58 -25.72 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -265.31
depreciation not included,106$
11. Annual depreciation factor, 1/y 0.20 0.320 0.192 0.115 0.115 0.058
12. Annual depreciation, 106$/y 9.95 15.61 9.18 5.40 5.30 2.60 48.04
13. Annual Gross Profit, 106$ -7.51 2.79 11.12 13.96 13.15 14.94 16.65 15.78 14.92 14.09 109.88
14. Annual Net Profit, 106$ -7.51 1.81 7.23 9.08 8.54 9.71 10.82 10.25 9.70 9.16 68.80
15. Annual operating cash flow,106$ 2.44 17.42 16.41 14.48 13.84 12.31 10.82 10.25 9.70 9.16 116.84
16. Total annual cash flow, 106$ 0.00 -7.61 -17.77 -34.34 2.44 17.42 16.41 14.48 13.84 12.31 10.82 10.25 9.70 9.16 57.12
17. Cumulative cash position, 106$ 0.00 -7.61 -25.38 -59.72 -57.28 -39.85 -23.44 -8.96 4.88 17.18 28.01 38.26 47.96 57.12
Profitability measures, time value of money NOT included:
18. Return on investment, ave. %/y 11.5
19. Payback period, y 4.3
20. Net return, 10 $
6
-2.08 at mar = 15.0 %/y
Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting
21. Present worth factor 1.52 1.32 1.15 1.00 0.87 0.76 0.66 0.57 0.50 0.43 0.38 0.33 0.28 0.25
22. Present worth of annual cash
0.00 -10.07 -20.43 -34.34 2.12 13.18 10.79 8.28 6.88 5.32 4.07 3.35 2.76 2.26 -5.83
flows, 106$
23. Net present worth, 106$ = -5.83 at discount rate= 15.0 %/y

24. Discounted cash flow rate of To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by
return, DCFR, %/y = 12.9 changing cell $C$39. Solver must be rerun after a change on any sheet.
Iterated discount rate= 0.129
25. Present worth factor 1.44 1.27 1.13 1.00 0.89 0.78 0.69 0.62 0.54 0.48 0.43 0.38 0.34 0.30
26. Present worth of annual cash 0.00 -9.71 -20.06 -34.34 2.16 13.67 11.40 8.91 7.54 5.94 4.63 3.88 3.25 2.72 0.00
flows, 106$

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting
27. Present worth factor 1.63 1.42 1.23 1.07 0.93 0.81 0.71 0.61 0.53 0.46 0.40 0.35 0.31 0.27
28. Present worth of annual cash
0.00 -10.81 -21.93 -36.86 2.28 14.14 11.58 8.88 7.39 5.71 4.37 3.60 2.96 2.43 -6.26
flows, 106$
29. Net present worth, 106$ = -6.26 at discount rate= 14.0 %/y

30. Discounted cash flow rate of To get DCFR, go to "Tools" and function "Solver." Set target cell as $R51, to be made = 0 by
return, DCFR, %/y = 12.1 changing cell $C$49. Solver must be rerun after a change on any sheet.
Iterated discount rate= 0.121
31. Present worth factor 1.53 1.36 1.20 1.06 0.94 0.83 0.74 0.65 0.58 0.51 0.45 0.40 0.36 0.32
32. Present worth of annual cash
0.00 -10.32 -21.33 -36.51 2.30 14.53 12.12 9.47 8.02 6.32 4.92 4.13 3.46 2.89 0.00
flows, 106$
 COMMENTS & NOTES
Time -3 is default time of estimate, time -2 is the first inflation.
Land can be included by replacing the default 0. Land is (-) at time 0, (+) when recovered
Time 0 is startup time.
Working capital (-) at time 0, (+) when recovered.
Salvage value is (+) at time of recovery.

Planned investments (e.g. replacements) entered here at inflated value.

Startup default is 10% of FCI.
Two year ramp-up of production.

Operating rate affects only variable part of TPC.

Depreciation default is 5-year MACRS.

No income tax credit taken for losses.

=Annual investment + Annual operating cash flow

ROI, PBP and Net return do NOT include recovery amounts, by text definition.
Compare with ROI = 15.0 %/y
Compare with reference PBP = 3.6 y.
Compare with net return = 0.
NPW and DCFR include recovery amounts, by text definition.
Uses single-year present worth factor from Table 7-3.
If there is more than one sign change in the annual cash flow, check DCFR value separately.

Compare with net present worth = 0.

"No value" results from a negative total cash flow in R27.

Compare with R5.

NPW and DCFR include recovery amounts, by text definition.

Uses 1-year present worth factor from Table 7-5.
If there is more than one sign change in the annual cash flow, check DCFR value separately.

Compare with net present worth =0.

"No value" results from a negative cash flow in R26.

Compare with R6