Concepts and methods of economic evaluation

Reference no: EM132182144

Aim

To understand the concepts and methods of economic evaluation and prepare cost estimation, financial statements and cash flow for industrial operation.

Learning Outcomes

- Understand the concepts and methods of economic evaluation.
- Appreciate the concepts of supply and demand of raw materials, commodity, equipment in a plant.
- Understand the market analysis and economic climate of the process plants.
- Prepare cost estimation, financial statements and cash flow for industrial operation.

Task:

Background of the problem

Hydrochloric acid is a highly corrosive chemical compound and has several uses/applications. Due to its wide applications, JAMAL Chemicals LLC would like to invest on the production of Hydrochloric acid business to meet the demand in Oman and Middle East. As a chemical engineer working for this company you are requested to conduct a complete study on economic viability of this project and prepare a comprehensive feasibility study report for the project.

Additional information for your consideration during the feasibility study is shown in Table 1. Taxes, interest rates, labor rates and other related information are assumed according to the rules and regulations in Oman. Any insufficient data can be assumed with proper justifications.

Tasks

1. Prepare the process flow diagram and the complete list of major equipment required for starting up the Hydrochloric acid production plant to meet the annual demand with major equipment specifications.

2. Based on the purchased equipment cost, prepare a study estimate of the Hydrochloric acid plant (with an accuracy of ± 30 percent) and determine the total capital investment (TCI) required to establish the plant.

3. Estimated the total production cost (TPC) per kg of Hydrochloric acid.

4. Determine the Rate of Return (ROR) of the project. Comment on whether this RoR is justifiable to undertake the project.

5. Prepare a complete project feasibility report, which contains all of the above information in the form of a standard feasibility report format.

Attachment:- Engineering Economics.rar

Reference no: EM132182144

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