Page 218 - Plant design and economics for chemical engineers

190 PLANT DESIGN AND ECONOMICS FOR CHEMICAL ENGINEERS

Solution. If Eq. (8) is used with a 0.6 power factor and the Marshall and Swift
all-industry index (Table 3), the fixed-capital investment is
c, = CfEW”

If Eq. (8) is used with a 0.7 power factor and the Marshall and Swift all-industry
index (Table 3), the fixed-capital investment is
(2)".' = $1,053,000

If Eq. (9) is used with a 0.6 power factor, the Marshall and Swift all-industry index
(Table 3), and the relative labor and productivity indexes (Table 20), the fixed-
capital investment is
C” =f[D(R)” -t I]
where f = fEfLe,, and D and Z are obtained from Example 1,

C, = (~)(~)(~)[(308,000)(2)".6 + 128,000]
C, = (1.486)(1.620)(467.000 + 128,000)
C, = $1,432,000
If Eq. (9) is used with a 0.7 power factor, the Marshall and Swift all-industry
index (Table 3), and the relative labor and productivity indexes (Table 20), the
fixed-capital investment is
C” = $1,513,000
Results obtained using this procedure have shown high correlation with
fixed-capital investment estimates that have been obtained with more detailed
techniques. Properly used, these factoring methods can yield quick fixed-capital
investment requirements with accuracies sufficient for most economic-evalua-
tion purposes.

METHOD F INVESTMENT COST PER UNIT OF CAPACITY. Many data have
been published giving the fixed-capital investment required for various pro-
cesses per unit of annual production capacity such as those shown in Table 19.
Although these values depend to some extent on the capacity of the individual
plants, it is possible to determine the unit investment costs which apply for
average conditions. An order-of-magnitude estimate.of the fixed-capital invest-
ment for a given process can then be obtained by multiplying the appropriate
investment cost per unit of capacity by the annual production capacity of the
proposed plant. The necessary correction for change of costs with time can be
made with the use of cost indexes.
METHOD G TURNOVER RATIOS. A rapid evaluation method suitable for or-
der-of-magnitude estimates is known as the “turnover ratio” method. Turnover
ratio is defined as the ratio of gross annual sales to the fixed-capital investment,
gross annual sales
Turnover ratio = (14
fixed-capital investment