Transcript Economics

Section 2
Dr.Hoda’s part
Sheet of: Total Capital Investment
Eng. Reda Zein
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).
Working Capital Investment (WCI)

- Coulson method:
WCI=5-30% FCI Typically 15%FCI
- Beters method:
WCI=15-20%TCI Typically 15%TCI
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
Fixed Capital Investment (WCI)

- Beters method: Works with percentages
FCI=Direct plant cost (DPC) + (IPC) + Contractor’s
fee +Contingency.
IPC=Design and Engineering only
Coulson:
Items of PPC
Fluid
Solid-Fluid
A
Solid
Equipment
Say= A
A
Installation
0.4A
0.5A
Piping
0.7A
0.2A
Instrumentation
0.2A
0.1A
Electrical
0.1A
0.1A
Buildings
0.15A
0.05A
Storages
0.15A
0.2A
Utilities
0.5A
0.25A
Site development
0.1A
0.1A
Auxiliary Buildings
0.15A
0.15A
PPC
3.45A
2.65A
Design and Engineering
0.3 PPC
0.2 PPC
Contractor’s fee
0.05 PPC
0.05 PPC
Contingency
0.1 PPC
0.1 PPC
IPC
0.45 PPC
0.35 PPC
Beters:
Items of PPC
Fluid
Solid-Fluid
Equipment
Say= A
Installation
45%A
47%A
Piping
66%A
16%A
Instrumentation
18%A
9%A
Electrical
10%A
10%A
Buildings
18%A
25%A
Site development
10%A
10%A
Land
6%A
6%A
Utility
70%A
40%A
DPC
343%A
263%A
Design and Engineering (IPC)
A
Solid
A
33% DPC
Contractor’s fee
5-7% (DPC+IPC)
Contingency
10% (DPC+IPC)
Note: Buildings here means all buildings in factory so it includes
auxiliary buildings, storages and building of equipment
Let’s begin our sheet

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
purchased equipment cost is $ 100,000
(Ans.=$ 500,250)
the
3) The total capital investment for a chemical
plant is $ 1 million and the working is
$100,000. If the plant can produce an a
average of 8000 kg of final product per day
during a 365-day year, what selling price in
dollars per kg of product would be necessary
to give a turn over ratio of 1?
𝑇𝑢𝑟𝑛 𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =
𝐺𝑟𝑜𝑠𝑠 𝑎𝑛𝑢𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 (𝑡𝑜𝑡𝑎𝑙)
(Ans. =$ 0.3082/kg)
𝐹𝐶𝐼
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)
Any questions? 
