Page 288 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

The sum of the profits and cash flows over the 10-year period are $217 million and $357 million,
respectively. These totals are the same for each of the depreciation schedules used. The difference
between the cash flows and the profits is seen to be the depreciation ($357 – 217 = $140 million).

Example 9.23 demonstrated how different depreciation schedules affect the after-tax cash flow. The
accelerated schedules for depreciation provided the greatest cash flows in the early years. Because
money earned in early years has a greater value than money earned in later years, the accelerated schedule
of depreciation is the most desirable alternative.

9.9 Summary

In this chapter, the basics of economic analysis required to evaluate project profitability were covered.
The material presented in this chapter is founded on the principle that

Money + Time = More Money

To benefit from this principle, it is necessary to have resources to make an investment and the time to
allow the investment to grow. When this principle is applied to chemical processes, the revenue or