Direct permanent investment

After installation, the total cost of equipment (direct permanent investment) is 6,557,000. Allowing 18% for the cost of contingencies and contractor fees ( 1,180,300), the total depreciable capital is estimated to be 7,737,000. Ten percent of this is assumed to cover the cost of startup, 773,700, giving a total permanent investment of 8,511,000. Working capital is estimated to cover accounts receivable that is, the sales of 30 days production of wafers (41,800 wafers), assumed to sell for 260/wafer, giving 10,868,000. Together with a 2-day inventory of wafers, valued at the product price, the total working capital is 11,520,000. Hence, the total capital investment is 20,031,000. 

Contingencies are unanticipated costs incurred during the construction of a plant To account for the cost of contingencies, it is common to set aside 15% of the direct permanent investment, C0PI, which is comprised of the components in Table 16.9. In addition, Guthrie (1969) adds a contractor fee of 3% of the direct permanent investment. When this total of 18%, designated is added, the total depreciable capital, Cxdc obtained. 

Step 4 To obtain the direct permanent investment, Cppi, multiply Cjbm by the following factors to account for site preparation, service facilities, utility plants, and related facilities ... 

The following are the major units in a chemical plant. Evaluate the bare-module cost for each unit and for the entire process. Assuming no allocated costs for utilities and related facilities, estimate the direct permanent investment, the total depreciable capital, and the total permanent investment for the process. 

When left clicking within the Total Permanent Investment section, the Direct Permanent Investment dialog box appears. For each of the pertinent entries in Table 16.9, the default entry can be altered. Either a percentage value or an absolute dollar amount is entered. 

Cost of Contingencies and Contractor Fees 18.0% of Direct Permanent Investment Cost of Land 2.0% of Total Depreciable Capital Cost of Royalties 0... 

Direct Permanent Investment Cost of Site Preparation 51,100 ... 

---