Process Economy
Process Economy
Chemical Engineering VIII - Cycle
SOLVED PROBLEMS OF PROCESS ECONOMICS
3.4 - Power for water pumping facilities and other electrical equipment is provided by diesel
generators. Another option is generators that run on natural gas, but it would take a few years
before gas would be available in remote locations. Estimates indicate that switching to gas
would save $22,000 annually if started in the third year from today. With an interest rate of 8%
per year, calculate the present value in year 0 of the projected savings that will occur in years 3
to 10.
Factors found in FA and FAS tables
V Present= $/22000*[P/A, 8%,8]*[P/F, 8%,2] =$/22000*5.7466*0.8573 = $/108 384.324
3.34 – Four entrepreneurial students who recently graduated from electrical engineering have
a plan to start a new solar energy equipment company based on ETS (solar thermal energy)
technology. They turned to a group of investors to request a loan of $/5 million. They agreed
that the loan would be repaid by assigning 80% of the company's annual profits during the first
four years. In the fifth year, the organization would pay the balance in cash. The company's
business plan indicates that no profits are expected next year, but in years 2 through 4 they are
estimated to be $1.5 million annually. If the investors accept the deal with an interest rate of
15% per year and the business plan works perfectly, what is the amount expected for the last
payment (in year 5)?
Factors found in FA and FAS tables
P= $/5 000 000 $/5,000,000 = $/1,500,000 * [P/A, 15%,3]*[P/F, 15%,1] + X *[P/F, 15%,5]
TO [P/A, 15%,3]= 2.2832
[P/F, 15%,1]= 0.8696
0 1 2 3 4 5
[P/F, 15%,5]= 0.4972
n= years
Clearing ¨X¨
Have:
X= $/4 066 359
i= 15%
per
year
Process economics UNJFSC
Chemical Engineering VIII - Cycle
3.54 - The present value in year 0 of a lease that requires a payment of $/9000 now and
amounts that increase by 5% each year through the tenth year, with an interest rate of 8% per
year, is:
a. $/73 652
b. $/79 939
c. $/86 335
d. More than $/87,000
0 1 2 3 4 5 6 7 8 9 10
n= years
V i= 8%
$/9000 per
year
We organize a table with the annual debts
Year Major Interests Total Payments Debt
0 9000 0 0 0 0
1 9000 720.000 9720.000 0 9720.000
2 9720 777.600 10497.600 0 10497.600
3 10497.600 839.808 11337.408 0 11337.408
4 11337.408 906.990 12244.401 0 12244.401
5 12244.401 979.552 13223.953 0 13223.953
6 13223.953 1057.916 14281.869 0 14281.869
7 14281.869 1142.549 15424.418 0 15424.418
8 15424.418 1233.954 16658.372 0 16658.372
9 16658.372 1332.670 17991.042 0 17991.042
10 17991.042 1439.283 19430.325 0 19430.325
Present value in year 0 requires a payment now of $/9000 and amounts that increase
8% annually
Accumulated debt in year 10 = $/140,808,887
Total debt up to 10 years of lease = $/149,808,807
4.4- For an interest rate of 1% bimonthly, determine the number of times the interest will be
capitalized in:
a) Two months
b) Two semester periods
c) Three years
Process economics UNJFSC
Chemical Engineering VIII - Cycle
1% bimonthly for two months 1%/1
1% bi-monthly two semester periods 1%/6
1%bi-monthly three years 1%/18
4.34- NRG Energy plans to build a giant solar plant in Santa Teresa, New Mexico, to supply
electricity to West Texas Electric. The plant will have 390,000 heliostats that will concentrate
sunlight on 32 water towers to generate steam. Enough energy will be generated to supply
30,000 homes if the company spends $28 million per month for two years on building the
plant. How much do you have to get each month from years 3 to 22 (i.e., for 20 years) to
recover your investment more than 18% annually, compounded monthly?
i= 18% monthly
n= monthly
4.54- Many small companies use accounts receivable as collateral to obtain loans for the
purposes of continuing operations and paying payroll. If a company borrows $300,000 today at
an interest rate of 1% per month but the rate changes to 1.25% per month after four months.
How much will the company owe after one year?
$/300 000
TO
0 1 2 3 4 12
1.25% 1.5% 1.75% 2% 2.25% 2.5% 2.75% 3%
n = monthly
300000*[0.01+(1.25/100)+(1.5/100)+(1.75/100)+(2.00/100)+(2.25/100)+(2.5/100)+(2.75/100)=$/54000
Student: Coca Quillay Carlos
Course: Process Economics
School: Chemical Engineering
