ASSIGNMENT NO.

2: ENGINEERING FOR ROLL NUMBERS 201-233 CLO-1 MARKS: 5

DEADLINE: 2nd MAY, 2019

A plant producing 1*105 MT/year of B, a high demand bulk chemical, was installed in 2010. The cumulative cash position
graph has been misplaced. You are assigned the task to reproduce this graph using preliminary estimates.

[All economic values used should be either of 2010 or converted to 2010 using appropriate cost index.]

Equipment Specifications: (Material of Construction is Carbon Steel, unless stated otherwise .The following
mentioned equipment account for 40% of total purchased equipment cost)

 Reactor: 10 m long S.S. 316L welded pipe having 50 cm nominal diameter [Multiply the final cost of pipe
with 2.5 due to special fabrication]. Reactor also contains catalyst worth 100,000 $.
 Condenser: 30 m2 area, Shell and tube fixed sheet exchanger having tubes of 16 ft length and 0.75 in OD,
Designed at 10 atm.

Product Cost Information: (As in 2010):

 Ignore inflation, depreciation and interest.

 No patents, royalties or rents are applicable.
 The plant operates for 8000 hours per year, but wages are paid for whole year.
 Cost of Raw Material, A = 5 PKR/ kg product
 Byproduct : Product = 7:1 (By mass)
 Selling Rate of Product, B = 15 PKR/ kg AND Selling Rate of Byproduct , C = 6 PKR/kg
 Operating Labour: 60 people work in one shift on all plant and there are 4 shifts in total. Average wage
of operating Labour = 30,000 PKR/month
 Utilities are approximated as 10% of raw material cost.

Additional Information:

 A, B and C are non volatile at ambient conditions.

 For this particular case, Cost for new plant = 1.2 times the cost of addition to existing plant.
 Land was purchased in 2008 for 100 million PKR. Only land and 50% of Working Capital can be sold at
the end of service life. Everything else will be scrap and of zero value.
 Price of land remained constant.
 Plant was commissioned in a period of two years.
 Full production was obtained from plant, right from start up in 2010.
 Corporate Income Tax is 35% of gross profit.
 Service life of plant is 20 years.
 Ignore time value of money, inflation and import/export duties.