Reference no: EM131276354 , Length: Word count:2000
Aim
To develop an understanding of evaluating the economic viability of projects in process industries.
Objective
- to understand the concepts and methods of economic evaluation
- to prepare cost estimation, financial statements and cash flow for industrial operation.
Assessment Methodology:
The assessment for this coursework is based on the feasibility and viability analysis of the given project and the structured reporting of the same. The feasibility analysis carries 90% of the assessment while the remaining 10% comes from the structuring of the report. The detailed breakdown of marks for each assessment is shown under marking scheme.
1 Identification of the major equipment required for starting up a chemical plant.
2 Determination of the start-up capital for the project.
3 Estimation of the total production cost
4 Assessing the Rate of Return (RoR) of the project
5 Completeness of the project report and proper reporting of the key financial factors
CASE STUDY
Background of the problem
The demand for ammonia is on the increase. Emerging countries especially India and China are looking forward to become self-sufficient in terms of food production, and are seeking to produce more ammonia based fertilizers. The global demand for ammonia has increased from 96 million tons in 2000 to 120 million in 2011 and it is expected to grow further to reach the level of 160 million in 2020 (Source: Ammonia Global Market to 2020
- Food Security Concerns Driving Demand for Ammonia-Based Fertilizers, 2013).
Dhofar Fertilizers Company, a fertilizer manufacturing unit located in Sohar, has plans to capitalize on this business opportunity by investing on a new ammonia plant. Mr.Mohammed Al Farsi, the production manager, has been given the task to prepare a cost estimation and feasibility study for this product. As a chemical engineer working in the company you were delegated with this task. Prepare a comprehensive project report to assess the economic viability of the project.
Tasks
1. Prepare a list of the major equipment required to start an ammonia plant having an annual production capacity of 250,000 tonnes per year.
2. Based on the purchased equipment cost, prepare a study estimate of the ammonia plant (with an accuracy of ± 30 percent).
a. Determine the Fixed Capital Investment (FCI)
b. Determine the Working Capital Investment (WCI)
c. Determine the Total Capital Investment (TCI)
3. Estimated the total production cost (TPC) per tonne of ammonia.
4. Determine the Rate of Return (ROR) the project. Comment on whether this RoR is justifiable to undertake the project.
5. Prepare a project feasibility report, which contains all of the above information laid out in a standard feasibility report format.
Additional Notes:
1. Assume any insufficient data needed for calculation.
2. If recent cost data is not available the cost could be determined using appropriate cost indices/scaling factors.
3. The project feasibility report should contain all of the above information and should follow a standard report structure.
|
Should foreign brands expect competition in their home
: What advice would you offer to foreign brands to be more competitive in Chinese market? Should foreign brands expect competition in their home and other markets from Chinese brands in the future? Explain your response.
|
|
Determine the average temperature
: If the cooling air enters the 12-cm-wide core at 25°C and 1 atm at a rate of 0.8 L/s, determine the average temperature at which the air leaves the hollow core.
|
|
What is the difference between a manager and a leader
: What is the difference between a manager and a leader? Provide an example of a person who meets each of these categories and why.
|
|
Is racism the new black
: Is Racism the New Black? Review - a light approach to Australia's dark side, A panel of Australian comedians dissect race relations, but their razor-sharp wit can't mask the sheer weight of the topicRacism and comedy has never been easy bedfellows. W..
|
|
Determine the working capital investment
: Estimated the total production cost (TPC) per tonne of ammonia - determine the Rate of Return (ROR) the project. Comment on whether this RoR is justifiable to undertake the project.
|
|
Determine the inlet and exit velocities of the air
: Steam enters a nozzle with a low velocity at 150°C and 200 kPa, and leaves as a saturated vapor at 75 kPa. There is a heat transfer from the nozzle to the surroundings in the amount of 26 kJ for every kilogram of steam flowing through the nozzle.
|
|
Identify the industry of the organization
: Identify the industry of the organization and present industry statistics.- Compare and evaluate the organization's ratios against the industry averages.
|
|
Calculate velocity of nitrogen at pipe''s inlet and outlet
: Steam enters a long, insulated pipe at 1200 kPa, 250°C, and 4 m/s, and exits at 1000 kPa. The diameter of the pipe is 0.15 m at the inlet, and 0.1 m at the exit. Calculate the mass flow rate of the steam and its speed at the pipe outlet.
|
|
Analyze business situations using predominant ethical theory
: Analyze selected business situations using the predominant ethical theories, such as utilitarian, Kantian, and virtue ethics to guide ethical business decision making.
|