Group 08

22013913 Ngubane SM
22003308 Mthembu SB
22014826 Kubheka N
Financial Feasibility Study

Given Information
Description Value Units
Amount of vinyl acetate 110 metric tons/y
Operating period 330 days
Operating hours 8 hours
Cost of rent 200000 Rands/month
Storage space 10000 m2
Operating months 11 months

Exchange rates Rands (R)

1 USD 13.71

Raw material Cost (R/ton)

Ethylene 14671.49
Acetic Acid 7872.51
Total 22544

Plant components Quantity Cost for each component (R)

Reactor 1 10000.00
Pump 8 1300.00
Pneumatic gate valve 20 702.34
Butterfly valve 4 645.99
Heat Exchanger 1 3045.98
Distillation Column 1 2056.64
Cooler 4 1200.99
Compressor 2 1500.00
Separator 1 1415.00
Decanter 1 150.00
Vaporizer 1 795.78
Absorber 1 400.00
Total 23212.72

Utilities Cost ($) Quantity required

Low pressure steam 13.28 10
Medium pressure steam 14.19 10
High pressure steam 17.7 10
Natural gas or fuel gas 10 10
Wastewater treatment 56 10
Cooling water 0.35 10
Refrigerated water 4.43 10
Process water 0.07 10
Boiler feed water 2.5 10
Low temperature refrigerant 7.89 10
Very low temperature refrigerant 13.11 10
Total 139.52

Utilities expenses eThekwini tariff Cost per month (R)

Electricity (kW/h) 2.17 1736
Water (kiloliter) 33.7 674
Total 2410

Supplies(barrels, cable ties, safety gear, tools)

Estimate in rands per month 3000
Total p.a in rands 33000

Labour
Employees No. of employees Monthly salary per employees (R)
Permanent 16 10000
Non-permanent 15 4000
Total 31 14000

Annual salary for permanent (R) 1760000

Annual salary for non-permanent(R) 660000
Total annual salary (R) 2420000

Grand total (R) 2572059.62

Total cost (R)
10000
10400
14046.8
2583.96
3045.98
2056.64
4803.96
3000
1415
150
795.78
400
52698.12

Cost (R) Units

1820.69 GJ
1945.45 GJ
2426.67 GJ
1371.00 GJ
7677.60 km3
47.99 GJ
 607.35 GJ
9.60 ton
342.75 ton
1081.72 GJ
1797.38 GJ
17307.50 R

Cost per year (R)

19096
7414
26510

Total monthly salary (R)

160000
60000
220000
 Expenses

Transportation
Cost (R/l) Distance(km) Total cost (R)
16.91 10 169.1

Rent
Cost per month (R) Cost p.a (R)
200000 2200000

Insurance
Monthly cost (R) 400
Cost p.a (R) 4400

Taxes value Amount (R)

Income tax 58,289 571380.04
Income tax rate 0.28

Depreciation
Scrap value (R) 40,000
Useful life (Years) 5
Depreciation (R) 2539.624
Depreciation rate (%) 4.82
Total excluding depreciation (R) 52698.12
Total with depreciation (R) 50158.496
Grand total (R) 2775949.14
enses
Operating cost 152059.624
Salary 2420000
Expenses cost 2775949.14
Total 5348008.76
Estimated capital (R) 8000000

Cost Decimal value Percentage contribution of each cost

Process cost 0.02843 2.843
Salary 0.45250 45.250
Expenses cost 0.51906 51.906
Total (R) 1.00 100
Income without expenses
Value of 1 metric ton of VAM(R) 110 metric tons
16658.8 1832468

Balance sheet(without depreciation)

Expenses Amount in Rands
Operating cost 152059.62
Salary 2420000.00
Expenses cost 52698.12
Net income 9832468.00
Gross Profit 7207710.26

Balance sheet( with depreciation)

Expenses Amount in Rands
Process 152059.62
Salary 2420000.00
Expenses cost 50158.50
Net income 9832468.00
Gross Profit 7210249.88

Therefore the production of vinyl acetate is financially feasible because it produces high profit.