UR-new, which is even more efficient than the previous catalyst, UR. By using the UR-new,the added value
Question:
UR-new, which is even more efficient than the previous catalyst, UR. By using the UR-new,the added value in the production is set to be 60 USD per barrel.
The basis of the following calculations is a refinery that processes 30,000 barrels of oil a day and produces 365 days a year. For a refinery of this size, 110 tons of catalyst must be used. After 2.5 years,the catalyst must be replaced. Before UOP can attempt to sell the UR-new to refiners, they must first establish a selling price.
The development of UR-new has taken 3 years and the development cost is calculated to be 3.5 million USD per year.
The price of UR-new has now been established, and on that basis, sales of UR- new in the next 5 years will be: Year 1: 400 tons, Year 2: 700 tons, Year 3: 2,400 tons, Year 4: 3,800 tons and Year 5: 4,200 tons.
For the next 5 years, the marketing costs for UR-new are planned to be 200,000 USD per year.
Assume that the gross margin on UR -new at the established selling price is 30,000 USD per ton.
Further, assume that UOP uses an interest rate of 20% per annum.
Calculate the future value of the project.