Other Capital Items

Other capital items (interest on borrowed funds prior to start-up ... 

Other Capital Items Paid-up royalties and licenses are considered part of the capital investment since these are replacements for capitd to perform process research and development. The initial catalyst and chemical charge, especially for noble metal catalysts and/or in electrolytic processes, is a large amount. These materials are considered to have a hfe of 1 year. If funds must be borrowed for a new facility, then the interest on borrowed funds during the construction period is capitalized otherwise, the interest is part of the operating expense. 

In the case of a liquid recycle, the cost of this pressure increase is usually small. Pumps usually have low capital and operating costs relative to other plant items. On the other hand, to increase the pressure of material in the vapor phase for recycle requires a compressor. Compressors tend to have a high capital cost and large power requirements giving higher operating costs. 

A capital investment is required for any industrial process, and determination of the necessary investment is an important part of a plant-design project. The total investment for any process consists of fixed-capital investment for physical equipment and facilities in the plant plus working capital which must be available to pay salaries, keep raw materials and products on hand, and handle other special items requiring a direct cash outlay. Thus, in an analysis of costs in industrial processes, capital-investment costs, manufacturing costs, and general expenses including income taxes must be taken into consideration. 

But the asset value of a capital item decreases with time. After many years of use, the desalinator will have little value other than as scrap metal. As such, even capital assets are eventually consumed. The rate of consumption of capital assets is... 

This method of electrochemical surface preparation is not broadly known but has been effectively applied for small batch runs where tanks and other capital-intensive methods might have been used. Almost all of the solutions, brushes (or styli), and electrical power supplies, are proprietary. When this method is used, the entire family of proprietary items should be used mixed usage of items between... 

All the costs were calculated for a 260-Mw net-elcctrical-output plant operated at a load factor of 0.80. An annual charge of 14% was made for all capital items, other than the uranium inventory, for which a 4% armual charge was made. It is assumed that the reactor plant components will have been engineered and developed with separate funds not included in this estimate. 

An initial guess for the reactor conversion is very difficult to make. A high conversion increases the concentration of monoethanolamine and increases the rates of the secondary reactions. As we shall see later, a low conversion has the effect of decreasing the reactor capital cost but increasing the capital cost of many other items of equipment in the flowsheet. Thus an initial value of 50 percent conversion is probably as good as a guess as can be made at this stage. 

In the past, commodity chemicals were generally priced on the basis of ROl. Capital cost was the most critical item, and those elements that ate related to capital cost were the principal factors in the selling price (excluding taw material cost in some cases). On this basis, a satisfactory ROl resulted in acceptable values for other criteria such as ROS or sales margin. Many analysts favor ROS as a benchmark for comparison because it is up to date and simple and because it is increasingly difficult to determine a tme ROl based on what profits might be on plants built under indation and expensive capital and constmction costs. 

Example 2 Net Present Value for Different Depreciation Methods The following data descrihe a project. Revenue from annual sales and the total annual expense over a 10-year period are given in the first three columns of Table 9-5. The fixed-capital investment Cpc is 1,000,000. Plant items have a zero salvage value. Working capital C vc is 90,000, and cost of land C/ is 10,000. There are no tax allowances other than depreciation i.e., is zero. The fractional tax rate t is 0.50. 

Total Capital Cost The installed cost of the fixed-capital investment Cpc is obviously an essential item which must be forecast before an investment decision can be made. It forms pai4 of the total capital investment Cfc, defined by Eq. (9-14). The fixed-capital investment is usually regarded as the capital needed to provide all the depreciable facihties. It is sometimes divided into two classes by defining battery limits and auxiliaiy facilities for the project. The boundary for batteiy limits includes all manufacturing equipment but excludes administrative offices, storage areas, utihties, and other essential and nonessential auxihaiy facilities. 

There are, however, issues other than quality which will govern the control of items in stock. Inventory control is a vital part of any business. Stock ties up capital, so the less stock that is held the more capital the firm has available to apply to producing output. 

Inventory management is concerned with maintaining economic order quantities so that you order neither too much stock nor too little to meet your commitments. The stock level is dependent upon what it costs both in capital and in space needed to maintain such levels. Even if you employ a ship-to-line principle, you still need to determine the economic order quantities. Some items have a higher value than others, thereby requiring a higher degree of control. Use of the Pareto principle will probably reveal that 20%... 

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