A process has been designed to produce activated carbon from waste tyres. The total capital investment...

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A process has been designed to produce activated carbon from waste tyres. The total capital investment (TCI) of the process is estimated to be $15 million. The useful life period of the process is taken to be 16 years. The working capital is assumed to be 15 percent of the total capital investment (TCI). The fixed operating costs for the process are $1.3 million/year (excluding depreciation). The maximum production capacity of the process is 20 000 tons/year of activated carbon. The operating cost of the process is $0.75/kg. It is desired to break even at a production rate of 30 percent of the maximum process capacity. Assuming straight line depreciation with no salvage value, what should the selling price of the product be? [10] A process has been designed to produce activated carbon from waste tyres. The total capital investment (TCI) of the process is estimated to be $15 million. The useful life period of the process is taken to be 16 years. The working capital is assumed to be 15 percent of the total capital investment (TCI). The fixed operating costs for the process are $1.3 million/year (excluding depreciation). The maximum production capacity of the process is 20 000 tons/year of activated carbon. The operating cost of the process is $0.75/kg. It is desired to break even at a production rate of 30 percent of the maximum process capacity. Assuming straight line depreciation with no salvage value, what should the selling price of the product be? [10]

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Total capital investment TCI 15 million Useful life of the process 18 years Working capital 15 of TC... View the full answer