Money importance

As stated previously, the source of capital is often not known, and hence it is not known whether or not Eq. (A. 10) is appropiiate to represent the cost of capital. Equation (A. 10) is, strictly speaking, only appropriate if the money for capital expenditure is to be borrowed over a fixed period at a fixed rate of interest. Moreover, if Eq. (A. 10) is accepted, then the number of years over which the capital is to be annualized is unknown, as is the rate of interest. However, the most important thing is that even if the source of capital is not known, etc., and uncertain assumptions are necessary, Eq. (A. 10) provides a common basis for the comparison of competing projects. 

What we have calculated is the present value (at a particular reference date) of a future sum of money, using a specified discount rate. In any discounting calculation, it is important to quote the reference date and the discount rate. 

A great deal of tax money is spent in support of fundamental research, and this is often defended as having an intrinsic virtue. To take the present topic as an example, however, the study of just how molecules adsorb and react on a surface is fascinating and challenging, yet the tax-paying public should not be asked merely to support the esoteric pleasures of a privileged few. The public should expect the occasional major practical advance whose benefits more than pay for the overall cost of all research. The benefits in the present case come from the discovery and development of catalytic processes of major importance to an industrial society. 

Orga.nic Colora.nts. The importance of coal-tar colorants cannot be overemphasized. The cosmetic industry, in cooperation with the FDA, has spent a great deal of time and money in efforts to estabUsh the safety of these dyes (see Colorants for food, drugs, cosmetics, and medical devices). Contamination, especially by heavy metals, and other impurities arising from the synthesis of permitted dyes are stricdy controlled. Despite this effort, the number of usable organic dyes and of pigments derived from them has been drastically curtailed by regulatory action. 

The three general types of cost estimates needed are equipment cost, capital investment cost, and product cost. Equipment cost estimates are needed as part of the capital investment estimate, which indicates the amount of money that is needed to start the venture. Both of these estimates are reflected in the product cost estimate, which is important to both management and marketing groups. 

Capital Investment Cost. The capital investment involved in a proposed project is important because it represents the money that must be raised to get the project started, is used in profitabiUty forecasts, and is reflected in the estimated manufacturing cost of a product. The capital investment is classified herein as fixed capital, working capital, and land cost. Sample capital investment estimate forms provide for separate materials (M) and labor (L) categories, or just combined M L figures. 

Other Energy Systems. Chemical plants usually require cooling water, compressed air, and fuel distribution systems. Sometimes also included are refrigeration, pressurized hot water, or specialized heat-transfer fluids such as Therrninol Hquid or condensing vapor. Each of these systems serves the process and reflabiUty is the most important characteristic. Thus a project in any of them that achieves a 10% reduction in energy cost at the expense of a 1% loss of rehabihty loses money for the operation. 

The maximum net outlay is veiy important, since no matter how profitable a project is, the matter is academic if the company is unable to raise the money to undertake the project. 

It is important when appraising by (NPV) and (DCFRR) not to consider the past in profitabihty estimations. Good money should never follow bad. It is unwise to continue to put money into a project if a more profitable project exists, even though this course may involve scrapping an expensive plant. Other considerations may, however, outweigh purely financiaf criteria in a particular case. 

The same questions may then be asked for different values of the probabilities p and po. The answers to these questions can give an indication of the importance to the company of P at various levels of risk and are used to plot the utility curve in Fig. 9-25. Positive values are the amounts of money that the company would accept in order to forgo participation. Negative values are the amounts the company woiild pay in order to avoid participation. Only when the utihty value and the expected value (i.e., the straight line in Fig. 9-25) are the same can net present value (NPV) and discounted-cash-flow rate of return (DCFRR) be justified as investment criteria. 

One of the most important items in an income statement is depreciation expense. Although depreciation should not be thought of as a means to build up a fund to replace plant, it nevertheless does enable money to be retained in the business by reducing the profit available for distribution to stockholders. It is of course a duty of both accountants and management to see that sufficient money is retained in the business to replace assets and to invest such money in other processes or outside investment. 

A shortage of cash may prevent a company from taking advantage of large discounts available for bulk purchase of raw materials. The importance of the availability of adequate cash or near cash can be seen by considering an account payable within 28 days, with a 2 percent discount allowed if paid within 7 days. If cash is not available to pay the account within 7 days, this is then equivalent to paying 2 percent interest on the money for the remaining 21-day period, or an annual compound-interest rate of more than 41 percent. 

Project Control Having made a good estimate of the capital cost and the expected construc tion time, it is essential to introduce an effective system for controlling expenditure of time and money during construction. Good capital-cost control can cut down expenditures even when the definitive estimate is not veiy accurate. It is most important for management to receive early warnings if overruns in expenditure or time are likely to occur. 

Assistance in problem definition and in developing a test program should be sought from persons experienced in the field. If your organization has a consultant in separations of this land, by all means m e use of the expertise available. If not, it may be wise to employ an outside consultant, whose special knowledge and guidance can save time, money, and headaches. It is important to do this early after the separation equipment has been installed, there is httle a consultant can do to remedy the sometimes disastrous effects of a poor selection. Often it is best to work with established equipment manufacturers throughout the selection process, unless the problem is unusually sensitive or confidential. Their experience with problems similar to yours may be most helpful and avoid many false starts. 

Enzymatic Reactors Adding free enzyme to a batch reactor is practical only when the value of the enzyme is relatively low. With expensive enzymes, reuse by retaining the enzyme with some type of support makes great economic sense. As some activity is usually lost in tethering the enzyme and the additional operations cost money, stabihty is very important. However, many enzymes are stabilized by immobilization thus, many reuses may be possible. 

About 20% of the total import bill of a country like Britain is spent on engineering materials. Table 2.2 shows how this spend is distributed. Iron and steel, and the raw materials used to make them, account for about a quarter of it. Next are wood and lumber - still widely used in light construction. More than a quarter is spent on the metals copper, silver, aluminium and nickel. All polymers taken together, including rubber, account for little more than 10%. If we include the further metals zinc, lead, tin, tungsten and mercury, the list accounts for 99% of all the money spent abroad on materials, and we can safely ignore the contribution of materials which do not appear on it. 

There is basically one goal for the partnership, with possible side benefits. The goal is to save money. When all the dust settles, that is it. However, there are associated benefits, the best of which is to minimize or even do away with adversarial relationships. It may be wishful thinking to believe that these will be completely eliminated. A related, but very important, benefit is to build trust between the parties. This is necessary to achieve the goal. 

Interest Expense - Investment in equipment implies that one of two things must occur Either a company must pay for the project out of its own cash, or it must finance the cost by borrowing money from a bank, by issuing bonds, or by some other means. When a firm pays for a project out of its own cash reserves, the action is sometimes called an opportunity cost. If you must borrow the cash, there is an interest charge associated with using someone else s money. It is important to recognize that interest is a true expense and must be treated, like insurance expense. 

The importance of present worth, also known as present value, lies in the fact that time is money. The preference between a dollar now and a dollar one year from now is driven by the fact that a dollar in-hand can earn interest. Present value can be expressed by a simple formula ... 

R D management of PBAs development is an important and complex task as the time, money, and tech-... 

Subsidy is a transfer of money from government to an individual or a firm to stimulate undertaking a particular activity. Subsidies and subsidy-hke programs arc major parts of energy policies. However, such energy grants are only one example of government aid and not the most important examples. The basic economic principle that people respond favorably to financial incentives implies that such transfers stimulate the action that is aided. 

Toward the end of Tesla s life, unflattering articles were written about him, and there were innuendoes that he was involved in the occult. Money problems were never far away, and he moved his residence from one hotel to another, each one cheaper than the one before. His circle of friends contracted. Feeding the pigeons that lived close to his hotel became very important to him, and he developed an almost spiritual bond with them. 

This has been despite the fact that the UK has developed with a culture that is indifferent to engineering, the respectable professions being those such as law or medicine offering more money and prestige. This deeply rooted attitude was supported by an education system in which on the whole applied science - engineering - was not studied in schools or universities. This contrasts with the rest of world, where such studies were an important part of the curricula of many schools and universities as early as the eighteenth century. Engineering was not considered suitable for those with the ability to enter a university, where arts and sciences were studied. 

Blowdown costs money in terms of heat, water and chemicals, and should therefore be minimized. Control of blowdown and recovery of heat from it are important aspects of boiler operation. 

This in itself draws attention to one of the artistic aspects of the industrial catalyst designer s job. Money values are neither absolute, invariant, nor always logically desirable entities. For example, resource producing nations can increase feedstock prices and they may do so for political rather than for hard, technological reasons. One very important consequence is the fact that a catalytic process that is economic in one year but not in the next is not as attractive as one that can adapt. 

---