For a new process, the land was purchased for $10 million. The fixed capital investment, paid at
Question:
For a new process, the land was purchased for $10 million. The fixed capital investment, paid at the end of year 0, is $165 million. The working capital is $15 million, and the salvage value is $15 million. The estimated revenue from years 1 through 10 is $70 million/y, and the estimated cost of manufacture over the same time period is $25 million/y. The internal hurdle rate (interest rate) is 14% p.a., before taxes, and the taxation rate is 40%.
1. Draw a discrete, nondiscounted (before-tax) cash flow diagram for this process.
2. Determine the yearly depreciation schedule using the five-year MACRS method.
3. Determine the after-tax profit for each year.
4. Determine the after-tax cash flow for each year.
5. Draw a discrete, discounted (to year 0) cash flow diagram for this process.
6. Draw a cumulative, discounted (to year 0) cash flow diagram for this process.
7. What is the present value (year 0) of this process?
Step by Step Answer:
Analysis Synthesis And Design Of Chemical Processes
ISBN: 9780134177403
5th Edition
Authors: Richard Turton, Joseph Shaeiwitz, Debangsu Bhattacharyya, Wallace Whiting