Page 352 - Analysis, Synthesis and Design of Chemical Processes, Third Edition
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(all figures in $ millions).
40.
What do you conclude? Hint: When using the CAPCOST program, set the equation for COM = C raw
d
and input the variability in COM as a variability in the cost of raw materials.
materials d
You are considering buying a house with a mortgage of $250,000. The current interest rates for a
mortgage loan for a 15-year period are 7.5% p.a. fixed or 6.75% p.a. variable. Based on historical
data, the variation in the variable rate is thought to be from a low of 6.0% to a high of 8.5%, with the
most likely value as 7.25%. The variable interest rate is fixed at the beginning of each year. Answer
the following questions.
a. What are the maximum and minimum yearly payments that would be expected if the variable
41. interest option is chosen? For simplicity assume that the compounding period is one year.
b. Set up a Monte-Carlo simulation by picking 20 random numbers and using these to choose the
variable interest rate for each of the 20 years of the loan.
c. Calculate the yearly payments for each year using the data from (b).
Hint: You should keep track of the interest paid on the loan and the remaining principal. The
remaining principal is used to calculate the new yearly payment with the new yearly interest rate.
Perform a Monte-Carlo simulation on Example 10.1 for the following conditions shown. Show that
the variation in the NPV is the same as shown in Figure 10.15. To which variable is the NPV more
sensitive?
42.
Note: Because the Monte-Carlo method is based on the generation of random numbers, no two
simulations will be exactly the same. Therefore, you may see some small differences between your
results and those shown in Figure 10.15.
A product is to be produced in a batch process. The estimated fixed capital investment is $5 million.
The estimated raw materials cost is $100,000/batch, the estimated utility costs are $60,000/batch,
and the estimated waste treatment cost is $23,000/batch. The revenue is predicted to be
$220,000/batch. An initial scheduling scenario suggests that it will be possible to produce 22
batches/yr. The internal hurdle rate is 15% p.a. before taxes over 10 years.
43.
