Sink, capital

Figure 6-1 shows the concept of cash flow for an overall industrial operation based on a support system serving as the source of capital or the sink for capital receipts. Input to the capital sink can be in the form of loans, stock issues, bond releases, and other funding sources including the net cash flow returned to the... 

Capital costs for plants, 186-187 Capital gains taxes, 156-157 Capital investments, 157-158 cost factors in, 166-179 estimation of 158-163, 179-193, 210 types of 157-158 Capital ratio, 191 Capital-iecovery factor, 228 Capital sink, 150-152 Capitahzed costs apphcation of 231-232 definition of 230-231 equations for, 231... 

DecoveTj of Capital. In Figure 1, the annual book depreciation is used to retire the fixed capital investment. Whereas this accounting model does not correspond to the typical money flow, it is one possible model for recovery of capital. This model assumes that the investment is reduced each year by the amount of the annual depreciation. Another model (22) assumes that a uniform yearly book depreciation payment is made to an interest-bear sinking fund that accumulates to the depreciable fixed capital amount at the end of the venture. Using this second model, the investment is outstanding throughout the lifetime of the project. This also does not correspond to the actual money flow in most cases. ProfitabiUty analysis utilizes a third model based on discounted cash flows. 

Sindlady, heating surface area needs are not direcdy proportional to the number of effects used. For some types of evaporator, heat-transfer coefficients decline with temperature difference as effects are added the surface needed in each effect increases. On the other hand, heat-transfer coefficients increase with temperature level. In a single effect, all evaporation takes place at a temperature near that of the heat sink, whereas in a double effect half the evaporation takes place at this temperature and the other half at a higher temperature, thereby improving the mean evaporating temperature. Other factors to be considered are the BPR, which is additive in a multiple-effect evaporator and therefore reduces the net AT available for heat transfer as the number of effects is increased, and the reduced demand for steam and cooling water and hence the capital costs of these auxiUaries as the number of effects is increased. 

A fourth method of computing depreciation (now seldom used) is the sinking-fund method. In this method, the annual depreciation A is the same for each year of the life of the equipment or plant. The series of equal amounts of depreciation Aq, invested at a fractional interest rate i and made at the end of each year over the life of the equipment or plant of s years, is used to build up a future sum of money equal to (Cpc S). This last is the fixed-capital cost of the equipment or plant minus its salvage or scrap value and is the total amount of depreciation during its useful life. The equation relating i Fc S) and Ao is simply the annual cost or payment equation, written either as... 

In the sinking-fund method of depreciation, the effect of interest is to make the annual decrease of the book value of the equipment or plant less in the early than in the later years with consequent higher tax due in the earlier years when recovery of the capital is most important. 

Compound- Present- Sinking- Capital- Compound- Present- Compound- Present- Sinking- Capital- Compound- Present- ... 

Costs Because sink-float processing is applied to relatively coarse particles and is a single-pass operation, capital and operating costs are usually considerably lower than would be required for a flotation or a gravity mill of the same capacity. A large flow of water is required for feed preparation and for media recovery, but almost total recoveiy for recirculation is possible. A minimum of two job-trained operators per shift is generally required by law, but these would be able to attend several separators at almost any feed rate. 

A dollar that will be received a year from today has a present value of I divided by (1+r), where r is the discount rate, which is equal to the opportunity cost of capital and a dollar that will be received two years from today has a present value of 1 divided by (1+r)(1+r) or (1+r)f A payment that is to be received t years from today must be divided by (1 +r). If the opportunity cost of capital is fairly high, savings that will be realized many years from today will be heavily discounted. For example, if r is 10 percent, the present value of a dollar that will he received seven years from today is about 51 cents. If a dollar will be received twenty-five years from today, its present value is not even a dime. The total value of the tunnel that saves 1 million per year indefinitely is only 1 million divided by r. If the opportunity cost of capital is 10 percent, the tunnel is worth only 10 million. The economy will not prosper if it sinks 1 billion in building a tunnel that will generate only 10 million of benefits. 

Sinking fund An accounting procedure computed according to a specified procedure to provide capital to replace an asset. 

The use of compound interest is involved in the sinking-find method. It is assumed that the basic purpose of depreciation allowances is to accumulate a sufficient fund to provide for the recoveiy of the original capital invested in the property. An ordinary annuity plan is set up wherein a constant amount of money should theoretically be set aside each year. At the end of the service life,... 

Singular and plural in reports, use of 474 Sink, capital, 150-152 Sinking-fund method for determining depreciation, 283-285 Site-improvement costs, 175-176... 

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