Cost and Evaluation 111103

7/31/2019 Cost and Evaluation 111103

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WELCOME to Cost & Evaluation Workbookaccompanying Plant Design and Economics for Chemical Engineers, 5th edition,

by Peters, Timmerhaus and West.These spreadsheets are made available for convenient implementation of methodspresented in the text. The sheets are color coded to assist the user. A hypotheticalexample, 'Illustration 101', is included. The basis for all costs is Jan. 2002.

Steps to follow:

2. The sheets are intended for use in the sequence presented. However, any sheetmay 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 ofdelivered 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 enteredin 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 MACRSrow 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 calculatedannual TPC is transferred to 'Evaluation'.

9. The sheet 'Evaluation' uses values from other sheets to calculate the commonprofitability measures. The user may change defaults, or enter desired values

1. Please download the workbook to your computer.


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(See Table 6-9)

Default Subtotal Result

Notes & comments

Fraction of delivered equipment

8.8000.10 0.10 0.10 0.10 0.880

9.680

0.45 0.39 0.47 0.47 4.550

0.18 0.26 0.36 0.36 3.485

0.16 0.31 0.68 0.68 6.582

0.10 0.10 0.11 0.11 1.065

0.25 0.29 0.18 0.18 1.742

0.15 0.12 0.10 0.10 0.968

0.40 0.55 0.70 0.70 6.7761.69 2.02 2.60 2.60 34.848

0.33 0.32 0.33 0.33 3.194

0.39 0.34 0.41 0.41 3.969

0.04 0.04 0.04 0.04 0.387

0.17 0.19 0.22 0.22 2.130

0.35 0.37 0.44 0.44 4.259

1.28 1.26 1.44 1.44 13.939

48.787

Working capital (WC) 0.70 0.75 0.89 0.89 8.615

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 investmentis spent in the year beginning at the time of the estimate (year ending at time -2), 35% in thesecond year (ending at -1) and 50% in the third year (ending at time 0) These values may be

Total indirect costs

Purchased equipment installation

Subtotal: delivered equipment

Yard improvements

Service facilities (installed)Total direct costs

Engineering and supervision

Construction expensesLegal expenses

Fluidprocessingplant

Solid-fluidprocessingplant

Project Identifier: Illustration 101

plants. These values may differ depending on many factors such as location, process type, etc.

Purchased equipment, E'Delivery, fraction of E'

Buildings (including services)

Fixed capital investment (FCI)

Total capital investment (TCI)

Direct Costs

Indirect Costs

Piping (installed)Electrical systems (installed)

Instrumentation&Controls(installed)

Sent to 'Evaluation' and

'Year-0 $', there adjusted

as described below

ESTIMATION OF CAPITAL INVESTMENT BY PERCENTAGE OF DELIVERED EQUIPMENT METHOD

Contingency

User: copy

from valuesat left or

insert

Calculated

values,million $

Solid-processingplant

Contractor's fee

The fractions in the cells below are approximations applicable to typical chemical

Required, from a linked sheet or entered manually

Required user input


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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

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 local0.00 1

51.00

1 0.45 20.000 9.002 0.25 12.000 3.00

3 0.05 13.000 0.65

0.00

0.00

0.00

12.65

Annual raw

materials

cost, million

$/y

Annual

Amount,

million

kg/y

Operator

rate, $/h#

Annual

value of

product,

million $/y

Total annual cost of raw materials = Sent to sheet 'Annual

TPC'

Shifts per

day**

ENR skilled labor index)/6067 =

Sent to 'Evaluation'

and 'Year-0 $'

Total annual value of products =

Raw Materials

Name of

Material

Price,

$/kg

Annual

Amount,

million

kg/y

ANNUAL RAW MATERIAL COSTS AND PRODUCTS VALUES

Products, Coproducts and Byproducts

Number of

operators per

shift*

Operating Labor

Name of

Material

Price,

$/kg

Annual

operating

labor cost,

million $/y


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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.Required user input

Result

TOTAL UTILITY COST million $/y

Process air 0.45 $/100m3 #

100 m3#/y

Instrument air 0.90 $/100m3 #

100 m3#/y

Purchased, U.S. average 0.045 $/kWh 1800000 kWh/y 0.081

Self-generated 0.05 $/kWh kWh/y

Coal 1.66 $/GJ GJ/y

Fuel oil 3.30 $/GJ GJ/y

Natural gas 3.00 $/GJ 360000 GJ/y 1.080

Manufactured gas 12.00 $/GJ GJ/y

15oC 4.00 $/GJ GJ/y

5 C 5.00 $/GJ GJ/y-20

oC 8.00 $/GJ GJ/y

-50oC 14.00 $/GJ GJ/y

3550 kPa 8.00 $/1000 kg 1000 kg/y

790 kPa 6.00 $/1000 kg 40000 1000 kg/y 0.240

Exhaust (150 kPa) 2.00 $/1000 kg 1000 kg/y

Disposal 0.53 $/m3

m3/y

Annual utility

requirement, in

appropriate units

Sent to sheet 'Annual TPC'

2.025

Default units

of utility

requirementAir, compressed

Electricity

Fuel

Utility

Notes & comments

Default, may be changed

Process Identifier: Illustration 101

Annual utility

cost, million

$/y

Default

cost unitsDefault

un

itcost

Refrigeration, to temperature

Steam, saturated

Waste water


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Default = 5-y MACRS.

To use a different recovery period, copy the entire row into the depreciation row ofsheets 'Evaluation' and 'Year-0 $' (add columns to these sheets as needed).

User may elect straight-line depreciation and period (d = FCI/period), andsubstitute the value into the depreciation row on sheets'Evaluation' and'Year-0 $'.

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 0.074f 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 0.04510-year 0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.066 0.066 0.03315-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 0.03020-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

DEPRECIATION

YEARRecoveryperiod

Entry = MACRS depreciationas fraction/y of FCI

Default is in place in sheets 'Evaluation' and 'Year-0 $'.


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Default, may be changed Subtotal Notes & comments

User input RESULT

30 106

kg per year

Fixed Capital Investment, FCI 50.114 million $

12.650

0.885

0.15 of operating labor 0.885 0.133

2.025

0.06 of FCI 50.114 3.007

0.15 of maintenance & 3.007 0.451

0.15 of operating labor 0.885 0.133

0.01 ofc o 26.674 0.267

0 -- 0.000

19.550

0.02 of FCI 50.114 1.002 'Year-0 $'

0 of FCI 50.114 0.000

0.01 of FCI 50.114 0.501

0 of FCI 50.114 0.000

Calculated separately 1.503

Plant overhead, general 0.6 of labor, supervisi 4.024 2.415

2.415

23.468

0.2 of labor, supervisi 4.024 0.805

0.05 ofc o 26.674 1.334

0.04 ofc o 26.674 1.067

3.206

ItemBasis cost,million $/y

Administration

Distribution & selling

Manufacturing cost =

General Expense =

TOTAL PRODUCT COST WITHOUT DEPRECIATION = co

= 26.674

Catalysts and solvents

Basis

Maintenance and repairs

Operating supervision

Required, may be calculated here, in linked worksheet, or entered manually.

Raw materials

Operating labor

Cost,million $/y

Capacity

Defaultfactor, usermay change

ANNUAL TOTAL PRODUCT COST AT 100% CAPACITY

See Figure 6-7 and 6-8

Depreciation

Project identifier: Illustration 101

Utilities

Operating supplies

Laboratory charges

Royalties (if not on lump-sum basis)

Sent to 'Evaluation' and

Research & Development

Taxes (property)

Financing (interest)

Plant Overhead =

Fixed Charges =

Insurance

Rent

Variable cost =


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Construction inflation rate, fraction/y = 0.02Expenditures, entries must be negative Product price inflation rate, fraction/y = 0

TPC inflation rate, fraction/y = 0.02

Annual-compounding discount rate, fraction/y = minimum acceptable rate of return, mar = 0.15

Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma= 0.14

Income tax rate = 0.35Comments and notes begin in column S RESULT

-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

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 0.004. Salvage Value, 10

6$ 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

-17.93 -26.76 -29.45 -30.04 -30.64 -31.25 -31.88 -32.51 -33.17 -33.83 -297.45

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 50.1113. Annual Gross Profit, 10

6$ -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, 106$ 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

-0.86 at mar = 15.0 %/y

Default values, can be changed

Required, user must supply

ECONOMIC EVALUATION CURRENT, i.e. INFLATED, DOLLARS

Required, may be calculated here, in linkedworksheet, or entered manually


10. Annual Total Product Cost,

depreciation not included,106$

Year ending at time

20. Net return, 106$

1. Land, 106$ (see notes)

Row

Sum


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Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting

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

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

0.53 at discount rate= 15.0 %/y

15.2

Iterated discount rate= 0.152

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

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

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting

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

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

0.57 at discount rate= 14.0 %/y

14.1


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

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

30. Discounted cash flow rate ofreturn, DCFR, %/y =

23. Net present worth, 106$ =

27. Present worth factor

24. Discounted cash flow rate of

return, DCFR, %/y =

25. Present worth factor26. Present worth of annual cash

flows, 106$


flows, 106$


32. Present worth of annual cash

flows 106

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by

changing cell $C$39. Solver must be rerun after a change on any sheet.

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$51, to be made = 0 bychanging cell $C$49. Solver must be rerun after a change on any sheet.


flows 106$



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10/16

COMMENTS & NOTES

Time -3 is default time of estimate, time -2 is the first inflation.

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.

Land can be included, default is 0.


11/16

NPW and DCFR include recovery amounts, by text definition.

Uses single-year present worth factor from Table 7-3.

Compare with net present worth = 0.


Uses 1-year present worth factor from Table 7-5.

Compare with net present worth =0.

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

Compare with R6

If there is more than one sign change in the annual cash flow, check DCFR value separately.


"No value" results from a negative total cash flow in R27.Compare with R5.


12/16


13/16

Construction inflation rate, fraction/y = 0.02Expenditures, 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

Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma= 0.14

Income tax rate = 0.35

Comments and notes begin in column S RESULT

Row

-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 Sum

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, 10

6

$ (see notes) -8.96 8.96 0.004. Salvage Value, 10

6$ 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

-17.58 -25.72 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -27.75 -265.31

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 48.0413. Annual Gross Profit, 10

6$ -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

-2.08 at mar = 15.0 %/y

ECONOMIC EVALUATION CONSTANT, YEAR-0 DOLLARS


Required, may be calculated here, in linked

worksheet, or entered manually

Year ending at time

1. Land, 106$ (see notes)

10. Annual Total Product Cost,

depreciation not included,106$

20. Net return, 106$


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Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting

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

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 -5.83-5.83 at discount rate= 15.0 %/y

12.9


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

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

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting

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

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

-6.26 at discount rate= 14.0 %/y

12.1


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

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

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by


To get DCFR, go to "Tools" and function "Solver." Set target cell as $R51, to be made = 0 by





flows, 106$



return, DCFR, %/y =


flows 106$



flows, 106$


flows 106$



return, DCFR, %/y =


15/16

COMMENTS & NOTES

Time -3 is default time of estimate, time -2 is the first inflation.

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.

Land can be included by replacing the default 0. Land is (-) at time 0, (+) when recovered


16/16


Uses single-year present worth factor from Table 7-3.

Compare with net present worth = 0.


Uses 1-year present worth factor from Table 7-5.

Compare with net present worth =0.

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

Compare with R6

"No value" results from a negative total cash flow in R27.Compare with R5.



Cost and Evaluation 111103

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Transcript of Cost and Evaluation 111103