Process Economics SECTION A. PROCESS ECONOMICS A company...
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Accounting
Process Economics
SECTION A. PROCESS ECONOMICS A company is proposing to build a new plant and the construction will take 2 years. 1. (a) Construct a cash flow table for the proposal and calculate the payback time using the data provided in Table Q1 below. (15 marks) (b) Calculate the PV at 10% and 15%. Is the company likely to invest? (10 marks) Table Q1 Capital cost Plant life Working capital Operating costs Income Plant output $20 million 6 years 6 months operating cost, increasing as production expands $150 t $180 20,000 ty in first year of operation, increasing by 10,000 ty to the plant capacity of 50,000 ty 10% of capital cost 15% Scrap value Target rate of return
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