Capitalization examples

In om cases. Old Line and High Tech have fixed costs at 10% of total cost (refer to Table 25.3). On the other hand. Process has a structure with 40% fixed cost — most of which is capital investment. These fixed costs can also include expense items. However, for the purpose of illustration, we ll consider them all capital recovery items for both working capital (example inventory) and fixed asset investments (examples land, plant, and equipment). 

Figure 7.11 Optimization of the capital/energy tradeoff for Example 7.5.

Example A.4.1 The purchased cost of a distillation column is 1 million, and the reboiler and condenser are 100,000. Calculate the annual cost of installed capital if the capital is to be annualized over a 5-year period at a fixed rate of interest of 5 percent. 

When using annualized capital cost to carry out optimization, the designer should not lose sight of the uncertainties involved in the capital annualization. In particular, changing the annualization period can lead to very different results when, for example, carrying... 

Equation (F.l) shows that each stream makes a contribution to total heat transfer area defined only by its duty, position in the composite curves, and its h value. This contribution to area means also a contribution to capital cost. If, for example, a corrosive stream requires special materials of construction, it will have a greater contribution to capital cost than a similar noncorrosive stream. If only one cost law is to be used for a network comprising mixed materials of construction, the area contribution of streams requiring special materials must somehow increase. One way this may be done is by weighting the heat transfer coefficients to reflect the cost of the material the stream requires. 

For the above reasons, gas Is typically economic to develop only if it can be used locally, i.e. if a local demand exists. The exception to this is where a sufficient quantity of gas exists to provide the economy of scale to make transportation of gas or liquefied gas attractive. As a guide, approximately 10 Tcf of recoverable gas would be required to justify building a liquefied natural gas (LNG) plant. Globally there are few such plants, but an example would be the LNG plant in Malaysia which liquefies gas and transports it by refrigerated tanker to Japan. The investment capital required for an LNG plant Is very large typically in the order of 10 billion. 

Within the project box, the cashflow oi the project (or other investment opportunity) is the forecast of the funds absorbed and the money generated during the project lifetime. Take, for example, the development of an oil field as the investment opportunity. Initially the cashflow will be dominated by the capital expenditure (capex) required to design, construct and commission the hardware for the project (e.g. platform, pipeline, wells, compression facilities). 

In the above example, where the ultimate recovery remains unchanged throughout the field life, the capital allowance rate remains a constant factor of 700/250 = 2.8/bbl. 

In the above example, the discount rate used was the annual compound interest rate offered by the bank. In business investment opportunities the appropriate discount rate is the cost of capital to the company. This may be calculated in different ways, but should always reflect how much it costs the oil company to borrow the money which it uses to invest in its projects. This may be a weighted average of the cost of the share capital and loan capital of a company. 

The example just shown assumed one discount rate and one oil price. Since the oil price is notoriously unpredictable, and the discount rate is subjective, it is useful to calculate the NPV at a range of oil prices and discount rates. One presentation of this data would be in the form of a matrix. The appropriate discount rates would be 0% (undiscounted),.say 10% (the cost of capital), and say 20% (the cost of capital plus an allowance for risk). The range of oil prices is again a subjective judgement. 

One potentially powerfiil approach to chemical imaging of oxides is to capitalize on the tip-surface interactions caused by the surface charge induced under electrolyte solutions [189]. The sign and the amount of the charge induced on, for example, an oxide surface under an aqueous solution is detenuined by the pH and ionic strength of the solution, as well as by the isoelectric point (lEP) of the sample. At pH values above the lEP, the charge is negative below this value. 

Finally, analytical methods can be compared in terms of their need for equipment, the time required to complete an analysis, and the cost per sample. Methods relying on instrumentation are equipment-intensive and may require significant operator training. For example, the graphite furnace atomic absorption spectroscopic method for determining lead levels in water requires a significant capital investment in the instrument and an experienced operator to obtain reliable results. Other methods, such as titrimetry, require only simple equipment and reagents and can be learned quickly. 

The economic importance of an ore deposit itself is largely affected by mineral or metal prices. Mine closures and reopenings are a common event in the mineral iadustry for this reason. Economics can also be affected by the ore composition, for example, by unacceptable levels of penalty elements ia the ore. The assessment of overall economics of exploiting a given ore deposit is similar to that for any large-scale industry. The various cost components are those associated with equipment, labor, utiUties, contingencies, operation and production, transportation, working capital, suppHes, maintenance. 

The benefits of high selectivity He in the abiUty to produce high purity cobalt in a limited number of stages. This minimises capital and operating costs. It is particularly important when the solution in question contains low concentrations of cobalt. Eor example, solutions derived from laterite deposits may only contain 0.5—2 g/L Co but 90—100 g/L Ni. 

Modijications to the Recope Cycle. The recovery system is a principal capital cost in a kraft mill. Consequently, any recovery process that is less expensive to build can improve pulping economics. There have been numerous attempts to improve the kraft recovery process. Two examples are the direct alkaline recovery scheme (DARS) and the autocausticizing scheme using sodium borates (37). Both schemes eliminate the lime loop of the conventional kraft mill. As of 1996, neither is commercially used. 

---