Problem #5: (Profitability Analysis - Variable Demand & Supply) A proposal to manufacture 5,000 ton/yr of a halogenated organic intermediate is set out below: $2,500,000 Estimated total capital cost Construction time Working capital Operating cost (exc. depreciation) Revenue from sales Plant life Salvage value Land value Income tax rate 2 years 20% of FCI $80 per ton of product 400 dollars per ton of product 10 years $200,000 $500,000 35 % Operating cost (OC) at reduced capacity is expressed as follows: OC = $80 * (Capacity/5000)-0.5 Time (yr) Market forecast (ton/yr) OVOUAWNO 1500 1600 1700 1900 2500 3400 4700 5100 5300 4700 4000 2000 on Assuming the halogenated organic intermediate product is storable for a maximum of one year, would you recommend proceeding with the proposal? Justify your answer. Analyze the cash flow position. The dollar values are based on year 2 dollar which is the first year of operation Problem #5: (Profitability Analysis - Variable Demand & Supply) A proposal to manufacture 5,000 ton/yr of a halogenated organic intermediate is set out below: $2,500,000 Estimated total capital cost Construction time Working capital Operating cost (exc. depreciation) Revenue from sales Plant life Salvage value Land value Income tax rate 2 years 20% of FCI $80 per ton of product 400 dollars per ton of product 10 years $200,000 $500,000 35 % Operating cost (OC) at reduced capacity is expressed as follows: OC = $80 * (Capacity/5000)-0.5 Time (yr) Market forecast (ton/yr) OVOUAWNO 1500 1600 1700 1900 2500 3400 4700 5100 5300 4700 4000 2000 on Assuming the halogenated organic intermediate product is storable for a maximum of one year, would you recommend proceeding with the proposal? Justify your answer. Analyze the cash flow position. The dollar values are based on year 2 dollar which is the first year of operation