Annual Costs, Earnings, and Profitability Analysis

After studying this chapter, the reader should [Pg.563]

Be able to estimate annual costs using a standard cost sheet and estimate the annual cash flows and the working capital. The latter completes the estimation of the total capital investment, Ctci. in Table 16.9. [Pg.563]

Be able to compute approximate profitability measures, such as return on investment (ROI), payback period (PBP), venture profit (VP), and annualized cost (C ). These measures provide a snapshot view of the economic goodness, usually in the third year of operation. They do not include the time value of money, that is, compound interest. [Pg.563]

Be able to compute the present worth and future worth of single payments and annuities and the capitalized-cost perpetuity. These measures are often used to compare proposals for the purchase of two competitive equipment items. [Pg.563]

Be able to compute cash flows and depreciation, and use them to project the net present value and investor s rate of return (IRR) (also known as the discounted cash-flow rate of return, DCFRR), two measures that account for projections of revenues and costs over the life of the proposed process, and the time value of money. [Pg.563]

Big Chemical Encyclopedia