Economics

Section 2Dr.Hoda’s part

Sheet of: Total Capital Investment

Eng. Reda Zein

I S THERE IS ANY PROBLEM IN PREVIOUS SECTION?

TCI is the money utilized in a project to make a profit. TCI =Fixed capital investment (FCI) + Working capital

investment (WCI). FCI is the sum of money paid to build up a plant and make

ready for start up. WCI is the additional sum of money required to start and

operate the plant to the point when income is earned (1-3 months).

Total capital investment (TCI)

- Coulson method:

WCI=5-30% FCI Typically 15%FCI

Beters method:

WCI=15-20%TCI Typically 15%TCI

Working Capital Investment (WCI)

- Coulson method: Works with factors

FCI=Physical plant cost (PPC) + In direct plant

cost (IPC)

IPC=Design and Engineering + Contractor’s

fee +Contingency

Fixed Capital Investment (WCI)

- Beters method: Works with percentages

FCI=Direct plant cost (DPC) + (IPC) +

Contractor’s fee +Contingency.IPC=Design and Engineering only

Fixed Capital Investment (WCI)

Items of PPC Fluid Solid-Fluid

Solid

Equipment Say= A A AInstallation 0.4A 0.5APiping 0.7A 0.2AInstrumentation 0.2A 0.1AElectrical 0.1A 0.1ABuildings 0.15A 0.05AStorages 0.15A 0.2AUtilities 0.5A 0.25ASite development 0.1A 0.1AAuxiliary Buildings

0.15A 0.15A

PPC 3.45A 2.65A

Coulson:

Design and Engineering

0.3 PPC 0.2 PPC

Contractor’s fee 0.05 PPC 0.05 PPCContingency 0.1 PPC 0.1 PPCIPC 0.45 PPC 0.35 PPC

Items of PPC Fluid Solid-Fluid

Solid

Equipment Say= A A AInstallation 45%A 47%APiping 66%A 16%AInstrumentation 18%A 9%AElectrical 10%A 10%ABuildings 18%A 25%ASite development 10%A 10%ALand 6%A 6%AUtility 70%A 40%ADPC 343%A 263%A

Beters:

Design and Engineering (IPC)

33% DPC

Contractor’s fee 5-7% (DPC+IPC)Contingency 10% (DPC+IPC)

Note: Buildings here means all buildings in factory so it includes auxiliary buildings, storages and building of equipment

Let’s begin our sheet

1) Prepare a study estimate of the fixed capital investment for a process plant handling fluids with a high degree of automatic controls knowing that the purchased equipment cost is $ 100,000 (Ans.=$ 500,250)

3) The total capital investment for a chemical plant is $ 1 million and the working is $100,000. If the plant can produce an a average of 8000 kg of final product per day during a 365-day year, what selling price in dollars per kg of product would be necessary to give a turn over ratio of 1?

(Ans. =$ 0.3082/kg)

4) The purchased equipment cost for a plant which produces pentaerythritol (solid-fluid processing plant) is $ 300,000. The plant is to be an addition to an existing plant. The contractor’s fee will be 7% of the direct plant cost. All other values are close to the average values found for typical chemical plants. On the basis of this information, estimate the following: (a) The total direct plant cost.(b) The fixed capital investment.(c) The total capital investment.(Ans.:a)$657,000, b)$ 1,007,181 c) $1,184,919)

Any questions?