Page 177 - Plant design and economics for chemical engineers

COST ESTIMATION 151

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(before depre:mtion charge) Net cash
flow from
the project
mcludmg
depreclotlon
write-off
for the
books
4 Investment = T
Total copltol
= W + A , + V
land
(wthout
Nonmonufocturmg
-I ond depreclotlon
flxed-copltol
choige must
uwestment
woe off
project
for
V over
Ax +
hfe of
project)
J
,
Totol copltol
\
Othe, ,,11,’ investment land)
(wthout
Investments \
-5\
copltol Net cash flow to copltol smk
source
and from the project
Other
capitol Input
Boids 1 \ stock
Preferred
Common stock
FlGURE 6-1
Tree diagram showing cash flow for industrial operations.

capital sink from each project. Output from the capital source is in the form of
total capital investments for each of the company’s industrial operations,
dividends to stockholders, repayment of debts, and other investments.
The tree-growth concept, as shown in Fig. 6-1, depicts a trunk output to
start the particular industrial operation designated as the total capital invest-
ment. This total capital investment includes all the funds necessary to get the
project underway. This encompasses the regular manufacturing fixed-capital
investment and the working-capital investment along with the investment re-
quired for all necessary auxiliaries and nonmanufacturing facilities. The cash
flow for the capital investments can usually be considered as in a lump sum or