Page 315 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

NPV for carbon steel pump:
–4
–8
NPV = –($8000)(1 + 1.08 + 1.08 + 1.08 –12 + 1.08 –16 + 1.08 –20 + 1.08 –24 )
–($1800)(P/A, 0.08, 28)
= –$46,580
NPV for stainless steel pump:
–7
NPV = –($16,000)(1 + 1.08 + 1.08 –14 + 1.08 –21 ) – ($1600)(P/A, 0.08, 28) = –$51,643

The carbon steel pump has a less negative NPV and is recommended.

As found for the previous two methods, the common denominator method favors the carbon steel pump.

Choice of Methods. Because all three methods of comparison correctly take into account the time value
of money, the results of all the methods are equivalent. In most problems, the common denominator
method becomes unwieldy. We favor the use of the EAOC or the capitalized cost methods for our
calculations.

10.6 Incremental Analysis for Retrofitting Facilities

This topic involves profitability criteria used for analyzing situations where a piece of equipment is
added to an existing facility. The purpose of adding the equipment is to improve the profitability of the
process. Such improvements are often referred to as retrofitting. Such retrofits may be extensive—
requiring millions of dollars of investment—or small, requiring an investment of only a few thousand
dollars.

The decisions involved in retrofitting projects may be of the discrete type, the continuous type, or a
combination of both. An example of a discrete decision is whether to add an on-line monitoring and
control system to a waste water stream. The decision is a simple yes or no. An example of a continuous
decision is to determine what size of heat recovery system should be added to an existing process heater
to improve fuel efficiency. This type of decision would involve sizing the optimum heat exchanger, where
the variable of interest (heat-exchanger area) is continuous.

Because retrofit projects are carried out on existing operating plants, it becomes necessary to identify all