Capital-dependent costs

Production costs include capital-dependent costs, e.g. depreciation, interest, insurance, and taxes and operating costs such as costs of raw materials and auxiliaries, costs of utilities, waste-disposal costs, labour costs, maintenance costs, and overheads. 

Capital-dependent costs (depreciation, interest, taxes). 

The cost of the capital depends on its source. The source of the capital often will not be known during the early stages of a project, and yet there is a need to select between process options and carry out preliminary optimization on the basis of both capital and operating costs. This is difficult to do unless both capital and operating costs can be expressed on a common basis. Capital costs can be expressed on an annual basis if it is assumed that the capital has been borrowed over a fixed period (usually 5 to 10 years) at a fixed rate of interest, in which case the capital costs can be annualized according to... 

Raw material costs should be estimated by direct computation from flow rates and material prices. The flow rates are deterrnined from flow sheet material balances. The unit prices are obtained from vendors, company purchasing departments, or the Chemical Marketing Reporter. For captive raw materials produced internally, a suitable transfer price must be estabHshed. Initial catalyst charges can be treated as a start-up expense, working capital component, or depreciable capital, depending on the expected catalyst life and cost. Makeup catalyst is frequendy treated as a raw material. 

Working capital may vaty from a very small fraction of the total capital cost to almost the whole of the invested capital, depending on the process and the industiy For example, in jewelry-store operations, the Fixed capital is veiy small in comparison with the working capital. On the other hand, in the chemical-process industries, the working capital is hkely to be in the region or 10 to 20 percent of the value of the fixed-capital investment. 

Capital investment costs can be divided into two categories (1) costs that are independent of the location (Inside Battery Limits, ISBL), and (2) costs that are dependent on the location (Outside Battery Limits, OSBL). 

The nominal costs are assigned to firms. How much actually affects product prices, employee wages, and capital depends on demand and supply elasticities. For example, if consumer demand for products governed by strict liability is very inelastic (i.e., very price insensitive), consumers will bear most of the actual costs. 

Capital-related costs The capital costs are determined mainly by the required membrane area for a certain plant capacity and feed and required product concentration. Other items such as pumps and process control equipment are considered as a fraction ofthe required membrane area. This fraction depends on the plant capacity. The same is true for the required land that also depends on the location of the plant. 

Capital investment costs do not include costs for lamp replacement and luminaire cleaning. The latter depend on the specific situation in the plant and may not be specified in general Key for lamp type marking see Section 6.8.5... 

The private price projections used are those implied by the National Energy Plan of 1977 as expressed in various DOE reports. The social prices were derived from the private prices by correcting for taxes and subsidies and by adding pollution and foreign dependence costs where appropriate. The homeowner s real opportunity cost of capital was 1% and the real social opportunity of capital was 8%, Table I shows the public benefits of the solar technology with and without the storage R D activity for each time period. The present value of the total benefits of the storage R D activity under these circumstances is S. 7 billion. 

The net present value method is the most popular one in use today. An arbitrary time frame (i.e., time zero or the present time) is selected as the basis for the calculations. All investment expenditures made prior to time zero are compounded forward to time zero, and all income items are discounted back to time zero using an interest rate (or arbitrary barrier return ) set by management at a few percentage points above the cost of capital, depending on the project risk. The equation for determining the net present value is... 

Servicing the working capital depends on the credit value and its type, as well as on the interest rate. It is reasonable to assume the credit to be equal to the variable cost of a drying process. In developed countries the interest charges on the working capital can be estimated as 4%-7% of the annual credit, but it is strongly recommended to consider local conditions. 

Fixed capital million Variable cost /tonne Fixed capital dependent charges /tonne Other fixed costs /tonne Cost + return... 

Of course, various levels of automation may be considered, depending on production volumes and capital expenditure costs. However, with continued miniaturization of surface-mount products as well as the strict requirements for the repeatable placement of specific solder paste volumes and accurate placement of components, will be a foregone necessity to assemble surface-mount technology with a fuUy automated assembly process. 

Typical values of allowable settlements at time of handover of a reclamation area depend strongly on the final use of the area and the type of structures to be realised on top of the fill. Economic considerations might also play a role by balancing capital investment costs versus maintenance cost. Therefore typical settlement specifications caimot generally be defined and performance based design is therefore of utmost importance. 

Maintenance costs depend on whether processing fluids are solids on the one hand or gas and liquid on the other. Solids handling tends to increase maintenance costs. Highly corrosive process fluids increase maintenance costs. Average maintenance costs tend to be around 6 percent of the flxed capital investment. ... 

Some variables often have dependencies, such as reservoir porosity and permeability (a positive correlation) or the capital cost of a specific equipment item and its lifetime maintenance cost (a negative correlation). We can test the linear dependency of two variables (say x and y) by calculating the covariance between the two variables (o ) and the correlation coefficient (r) ... 

The cost of implementing CAO depends of course on the system installed, but for a new field development is likely to be in the order of 1 -5% of the project capital expenditure, plus 1-5% of the annual operating expenditure. 

The choice of technology, the associated capital, and operating costs for a chlor—alkaU plant are strongly dependent on local factors. Especially important are local energy and transportation costs, as are environmental constraints. The primary difference ia operating costs between diaphragm, mercury, and membrane cell plants results from variations ia electricity requirements for the three processes (Table 25) so that local energy and steam costs are most important. 

The price differential at which coal becomes competitive with gas depends on plant size and the cost of capital, but based on estimates by the International Energy Agency (21) the required price ratio for gas to coal in North America falls into the range of 3.1 to 3.7 on an equivalent energy basis ( /MJ). Current prices give a gas/coal cost ratio nearer 1.5 to 2.0. As a result, all projected new methanol capacity is based on natural gas or heavy oil except for the proposed coal-based plant in China. 

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