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Economics

Economics. Section 2 Dr.Hoda’s part Sheet of: Total Capital Investment. I s there is any problem in previous section?. Total capital investment (TCI). TCI is the money utilized in a project to make a profit . TCI =Fixed capital investment (FCI) + Working capital investment (WCI).

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Economics

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  1. Economics Section 2Dr.Hoda’s partSheet of: Total Capital Investment Eng. RedaZein

  2. I s there is any problem in previous section?

  3. Total capital investment (TCI) • TCI is the money utilized in a project to make a profit. • TCI =Fixed capital investment (FCI) + Working capital investment (WCI). • FCI is the sum of money paid to build up a plant and make ready for start up. • WCI is the additional sum of money required to start and operate the plant to the point when income is earned (1-3 months).

  4. Working Capital Investment (WCI) • Coulson method: WCI=5-30% FCI Typically 15%FCI • Beters method: WCI=15-20%TCI Typically 15%TCI

  5. Fixed Capital Investment (WCI) • Coulson method: Works with factors FCI=Physical plant cost (PPC) + In direct plant cost (IPC) IPC=Design and Engineering + Contractor’s fee +Contingency

  6. Fixed Capital Investment (WCI) - Beters method: Works with percentages FCI=Direct plant cost (DPC) + (IPC) + Contractor’s fee +Contingency. IPC=Design and Engineering only

  7. Coulson:

  8. Beters: Note: Buildings here means all buildings in factory so it includes auxiliary buildings, storages and building of equipment

  9. Let’s begin our sheet

  10. 1) Prepare a study estimate of the fixed capital investment for a process plant handling fluids with a high degree of automatic controls knowing that the purchased equipment cost is $ 100,000 (Ans.=$ 500,250)

  11. 3) The total capital investment for a chemical plant is $ 1 million and the working is $100,000. If the plant can produce an a average of 8000 kg of final product per day during a 365-day year, what selling price in dollars per kg of product would be necessary to give a turn over ratio of 1? (Ans. =$ 0.3082/kg)

  12. 4) The purchased equipment cost for a plant which produces pentaerythritol (solid-fluid processing plant) is $ 300,000. The plant is to be an addition to an existing plant. The contractor’s fee will be 7% of the direct plant cost. All other values are close to the average values found for typical chemical plants. On the basis of this information, estimate the following: (a) The total direct plant cost. (b) The fixed capital investment. (c) The total capital investment. (Ans.:a)$657,000, b)$ 1,007,181 c) $1,184,919)

  13. Any questions? 

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