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1.
A 1-1 countercurrent heat exchanger is designed to heat a single component process stream from
150 °C to 180 °C using a floating head shell and tube heat exchanger. The hot utility is
superheated steam with 50 K superheat. The steam is at 10barg with saturation temperature of
184° C. It costs $30/1000kg. The steam stream exits at 165 °C. The latent heat of vaporization
of available steam is 2000 kJ/kg and Cp of steam is 2.1 J/(g.K) The applicable heat transfer
coefficient 1,000 kJ/ (hr- sq.meter K).
The process stream has a flow rate of 100 k-moles/hr and heat capacity of 100 kJ/ (k-mole K).
The applicable Marshal Swift (MS) cost index today is 1600 and while MS index was 1100 at
September 2001 when the cost of the equipment was available. The cost figure is given below.
Y ou can assume plant operates 8400 hrs a year.
a. How much steam is used per hour?
10,000
CEPCI = 397
(Sept 2001)
1000
250
Floating-Head
Shell-and-Tube
100
10
100
1000
10,000
Heat Transfer Area, A (m²
Purchased Costs for Floating-Head Shell-and-Tube Heat
b.
What is the utility cost on an annual basis?
C.
What is the size of the heat exchanger?
d.
What is heat exchanger cost in today dollar?
e.
What is the annual equivalent cost of Heat exchanger is if im=0.1?
3.
A plant is designed to produce 10,000 t/year of product. Total fixed capital investment is $2,500,000
and the plant operates about 8,400 h/yr. Working capital is 5% of annual sales revenue. It is a highly
automated continuous process involving four processing steps. Plant overhead is 50% of labor payroll.
Supervision cost is $180,000 per year. Repairs and maintenance cost is 10% of FCI for the first year
and then increase by $100,000 each year. The plant life is 10 years and the company accountant uses
the sum-of-the-years-digits method for depreciation. Salvage value of the plant is 10% of FCI.
Selling and distribution costs are $100 per ton of product. General overheads are 10% of sales
revenue. Tax rate is 35 %. Each ton of product requires:
1,400 kg. raw material at $1.50/kg.
280 Kwh electricity at $0.05/Kwh
4500 kg. steam at $2.5/1,000 kg
30 cubic m. cooling water at $0.5 per cubic m.
25 cubic m. of natural gas at $0.1 per cubic m.
A) What price should the company charge for the product in order to have a discounted cash flow rate
of return of 30%?
B) Determine the profitability of the project and plot the cumulative cash flow diagram, if it operates
at 50% of full capacity for the first year, and at 75% of full capacity for the second year. Take im as
0.15.
Hint: Use the following equation for estimating operating labor cost ($50/man-hr)
Operating Man - hours
of Processing Steps
Tons of Product
(Plant Capacity [Tons/Day]),76
where L = 10
4.
Four processes are available to manufacture an organic chemical. They all start with the same
raw material and make the same product, but vary in complexity. The following data is available:
Process
A
B
C
D
Number of steps
8
10
11
11
Conversion efficiency (%)
65
85
75
85
Economic life (years)
9
10
10
8
The capacity is for 1000 tons/year, the raw material cost is $474/ton of product and the value of the
product is $1500 per ton.
A detailed costing has only been carried out for process A. The fixed capital investment of 800 ton
per year plant for process A is $800,000. The estimated operating cost excluding the raw material and
depreciation (d) for the process is $300 per ton of product. The working capital is estimated as 10%
of FCI, and effective tax-rate is 50%. Straight-line depreciation with no salvage value is adequate for
initial screening studies.
A simplified correlation for organic chemical processes is given by:
FCI= a NQ0.7
where FCI is the fixed capital investment
N is the number of processing steps
Q is capacity in tons
a is a constant for this class of chemicals
Operating costs may be calculated from a similar relation
OC
where R is the raw material cost in $ per ton of product
OC is operating cost excluding depreciation in $ per ton of product
b is a constant
Which of the four processes should be developed? State your assumptions and justify your answer.
Hint: Approach you may want to take:
Plan of Attack.
Use the data given for Process A to find constants a and b.
Then you should proceed to calculate cash flows and profitability of all the projects.
Making a Table helps!
i. Use efficiency to find raw material consumption and cost .
You may see that only A and B should be considered
Do incremental analysis!
i. Account for the differences in economic life by investing the money at
minimum attractive interest.
11. Incremental DCFRR (B-A) is 20 - 25%

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