Equipment purchase costs expression

Using Eqn. (7..7-4) to calculate the purchased cost of equipment, the following expression is obtained for the total equipment costs ... 

The other cost contributions, either as direct or indirect costs, are expressed by means of factors /j relative to the purchasing cost of basic equipment. Table 15.6 presents some mean values, ordered by the type of process fluids, fluids and solids, or solids (Peters Timerhaus, 1991). The reference year is 1990. The factors FI to F9 designate direct costs, while the factors FIO and FI 1 regard indirect costs. The factors F12 and F13 allow the estimation of contractor fees and unforeseen events. The factors F6 to F9 considers only plant extensions and improvement of an existing site, and not grass-root... 

The interesting result is that the total cost of the investment can be expressed simply by a constant multiplying the purchasing cost of equipment PCE ... 

Corrective indexes are needed to adapt old prices to the current or future situation. The purchased equipment cost in year i, C, , can be evaluated based on the purchased equipment cost in one of the former year r, Cp.r using the following expression ... 

Alternatives equations for the purchased and installed cost of equipment are given below. These have been adapted from Douglas (1988), which in turn originate from the data of Guthrie (1969). The capacity data are expressed in metric units. The values are more suited for US market. The M S factor for mid 2002 was 1095. 

Consider one last example. Equipment with a capacity to produce 10 kg/year is purchased for 10. The operating costs are a fixed cost of 150,000/year plus a variable cost of 2/kg. At what price must the product be sold to yield a 20% return on investment Substituting into the expression for return on investment, Eq. (3.107), we have... 

As a result of inflation, a dollar set aside (not invested) will purchase fewer goods and services in the future than the same dollar would today. In Chapters 7 and 8, it was seen that inflation of equipment, labor, and fuel costs could be tracked by the use of cost indexes. It is sometimes desirable to express these trends in terms of rates of inflation (/). This can be done using the cost indexes as follows ... 

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