Plant Design is a major requirement for you to be able to graduate BS ChE at Batangas

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Question:

Plant Design is a major requirement for you to be able to graduate BS ChE at Batangas State University. Suppose you are a panelist, and you must evaluate if the design is feasible or not. You look at the breakdown of expenses, possible revenues, etc. Here are some important chapters and discussions are taken from a certain plant design.

Market Study

This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Philippines” considers a 30-year period of study, starting 2021, after finishing its construction by 2020. All projections and interest rates set by the company shall be evaluated within this 30-year period. The inflation rate shall not be included in the computation and a minimum attractive rate of return is set at 20%.

Products

Our company produces ear dropper solutions which can be sold for PHP. 125.00 per bottle. Annually, the company can produce 1000 pallets of the product. Each pallet is stacked with 14 layers and each layer consists of 8 boxes. A box contains 12 bottles of ear droppers for wholesale purposes. In addition, the company also ventures for retail services.

By-products are also produced by the company including excess chemicals that can be sold for P1,200 per 15 grams. IIVSDROP produces a total of 7,820 kg of these excess chemicals per year.

Construction and Process

The company shall be constructed at Nasugbu, Batangas for PHP. 550,320,000. The permits, land acquisition documents and other legal matters amounted to PHP 27,000,000.

Company Expenses

Below is the breakdown of yearly expenses of the company:

Total Costs		Amount in Pesos
Labor Costs	11,200,000/yr.
Preventive Maintenance Costs	5,580,300/yr.
Safety Regulations and Certifications	790,000/3 yrs.
Employee Benefits and Insurance	PAG-IBIG	1,300,000/yr.
PhilHealth	2,700,000/yr.
SSS	3,600,500/yr.

Consumer Benefits

Aside from the revenues from the products sold, annual benefits from the company include PHP. 15,000,000/yr.

Assume a high demand for the product and by-products that all produced goods are sold each year within the study period. Calculate this by Payback period (tabular).

Based on the computed values, decide whether the project is economically justifiable or not.