Economic indicators

The project cashflow forms the basis of the economic evaluation methods which will be described. From the cashflow a number of economic indicators can be derived and used to judge the attractiveness of the project. Some of the techniques to be introduced allow the economic performance of proposed projects to be tested against investment criteria and also to be compared with alternative investments. 

From the cash flow and cumulative cashflow some basic economic indicators can be determined. The cashflow determines the economic lifetime of the field. When the cashflow turns permanently negative due to decreasing revenues (e.g. revenues are... 

In Section 13.2, a number of economic indicators were derived from the annual cash flow the most useful being the economic life of the project, determined when the annual cashflow becomes permanently negative. 

When the sensitivities are performed the economic indicator which is commonly considered is the true value of the project, i.e. the NPV at the discount rate which represents the cost of capital, say 10%. 

Phenolics are consumed at roughly half the volume of PVC, and all other plastics are consumed in low volume quantities, mosdy in single apphcation niches, unlike workhorse resins such as PVC, phenoHc, urea—melamine, and polyurethane. More expensive engineering resins have a very limited role in the building materials sector except where specific value-added properties for a premium are justified. Except for the potential role of recycled engineering plastics in certain appHcations, the competitive nature of this market and the emphasis placed on end use economics indicates that commodity plastics will continue to dominate in consumption. The apphcation content of each resin type is noted in Table 2. Comparative prices can be seen in Table 5. The most dynamic growth among important sector resins has been seen with phenoHc, acryUc, polyurethane, LLDPE/LDPE, PVC, and polystyrene. 

The effect of conversion is mostly an economic indicator. Additionally, a strong slowdown can indicate a reversible reaction. If this possibility is excluded by thermodynamic estimates, a strong inhibition of the rate is... 

Worrell, E. Price, L. Martin, N. Faria, J. and Schaeffer, R. (1997). Energy Intensity in the Iron and Steel Industry A Comparison of Physical and Economic Indicators. Energy Policy 25 (7-8) 727-744. 

Outcome health to AIDS product Comparison of health indicators (incidence, prevalence, fife expectancy, hfe years gained, QALYs etc.) and economic indicators (e.g. wealth, growth etc.)... 

The two indicators used in Example 10-5 give different answers. The Proceeds per Dollar of Outlay procedure is obviously wrong. It would take 12.5 years to pay off the investment for plant 1. If the 15,000,000 pretax profit available at the end of year 4 were invested at 7% interest, the accumulated interest would have exceeded 10,800,000 before plant 1 was paid for. In other words, the total profit for plant 1 would exceed 25,800,000 before plant 2 showed a profit. This is more than the total profit made by plant 2 during its whole life. If the 15,000,000 profit of plant 1 were invested for 21 years at 7% compounded annually, the total interest would amount to 47,100,000 or the total earnings would be 62,100,000. If after plant 2 were paid off die profits were invested at 7% per year, the interest would amount to 8,900,000 or a total pretax profit of 33900,000 25 years after the plant startup. This is 28,200,000 less than that earned in the same amount of time by plant 1. This shows that for this example the Annual Proceeds per Dollar of Outlay is a better economic indicator. 

The five economic indicators suggest that plant 2 is best. However, the greatest proceeds and hence the best economic choice is plant 1. (Interest was not considered here, but if an interest rate of less than 14% is used plant 1 will still come out best. The reader should prove this to himself.)... 

The major problems with the indicators that have been presented are that they fail to take into account the timing of payments and receipts and the magnitude of the profits. They also can give incorrect results when comparing projects having different time durations, To resolve these problems a different economic indicator... 

Whenever the same series of calculations is repeated a number of times, even with different sets of data, the use of a computer should be considered. For instance, the calculations of the net present value is very straightforward. It can easily be done using tables, a calculator, and/or a slide rule. However, it can also be done on a computer, and this would relieve the engineer of the responsibility of repeatedly performing the calculations. This will give him some time to analyze and compare the results. Besides this, he can also obtain from the same data the payout period and the return on the investment. He could even combine this with the program for the rate of return, and obtain all the major economic indicators for the same effort previously required to obtain any single one. 

Figure 18.14. Impact on economic indicators through introduction of hydrogen cars for EU25.

Another general characteristic of the chemical industry is its importance in everyday life. It is both critical and pervasive. It is critical to the economy of a developed country. In the first half of this century a nation s industrial development was gauged by its production of sulfuric acid, the chemical with the largest amount of production. It has been called the grandfather of economic indicators. Lately ethylene, the largest volume organic chemical, is used to judge this development. The chemical industry cannot be replaced by any other industry. If a country does not have one, it... 

We begin our discussion with what is by far the largest volume chemical produced in the United States sulfuric acid. It is normally manufactured at about twice the amount of any other chemical and is a leading economic indicator of the strength of many industrialized nations. Since about 80% of all sulfuric acid is made by the contact process which involves oxidation of sulfur, we will examine this raw material in detail. The average per capita consumption of sulfur in the United States is a staggering 135 Ib/yr. 

Fig. 8.5 shows the U.S. production of ethylene, propylene, and butadiene over the years. Ethylene has shown a good, steady increase for many years since the 1950s, as it has replaced ethanol as the major C2 raw material and is now used in nearly half of all organic polymers and chemicals produced by volume. Some would argue that it should be used in place of sulfuric acid as the main economic indicator of the chemical industry. Certainly for organic chemicals it has top billing. Propylene shows a similar but lower trend. Although the official production of propylene is usually about half that of ethylene, it is probably near ethylene if captive refmeiy-made... 

In order to keep track of the health and purchasing power of the main customers, Chemical and Engineering News keeps track of the economic indicators of the nation s economy, as well as a number of industries ... 

Gross national product An economic indicator of a country s economic activity. It is the sum of all the goods and services produced by a nation both within and outside its borders. 

The most important problem in industrial catalysis is the problem of achieving high selectivity, activity and technological performance of catalytic systems used in fine organic synthesis as it is connected with economical indices, quality of the target products and ecological situation. 

The future availability of energy has significant economic implications that are not captured by current projections of the GNP or other economic indicators. 

Significant Uses of Models. Several significant uses of this economic modeling capability have been made to date. Two of these uses will be briefly described here to indicate the substantiveness of the implications. A significant implication of current environmental policy is captured by one set of economic indicators and a significant implication of recent energy proposals is captured by another set of economic indicators. 

One way of determining the importance of a technique is to examine the economic statistics related to the sale of corresponding instruments. The diffusion of a technique increases the probability that an analyst will encounter it during his professional career. For example, the statistics above show that chromatographic techniques alone represent more than half of the sales of instruments for molecular analysis (as opposed to elemental analysis, which is half of this). However, economic indicators are not the only factor taken into account when assigning the importance of a method. For certain analyses, even a rarely used method can be the most important if it represents the only available means of solving a problem. 

Table 1 Main Technical-Economical Indicators for Reconstructing Kalmas and Karadag Underground Gas Storage Facilities... 

All eleven references in this category relate directly to Section 6.1, the Economic Evaluation of this project. They contain capital costing methods, cost correlations, typical plant and equipment costs, and economic indicators to account for cost changes with time. 

Reference CE8 contains the economic indicators including the M S Equipment Costing Index and the CE Plant Cost Index. These indices and their component values are listed from 1977 to 1985. 

Al 4. Anon., Economic Indicators , Chemical Engineering, 15 April, p. 7 (1985). 

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