econ-summary - Economic Analysis Procedure 1. De on le l of...

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Economic Analysis Procedure 1. Decide on level of accuracy. What is required? How much data is available? 2. Estimate the Fixed Capital Investment. Select method of estimation. Choose the most accurate given your data. Go through an item by item estimation. 3. Estimate the Product Cost . Item by item estimation. 4. Estimate Cash Flow . Sales price and total income, depreciation, taxation, profits (net, gross). 5. Select profitability criteria . Profitability Index, Net Present Worth 6. Recommendation . ChE 4253 - Design I
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COST ESTIMATION Types Of Cost Estimates 1. Detailed Estimate . Based on Detailed Engineering. Accuracy: ± 5% 2. Definitive Estimate . Based on basic Engineering and quotes from suppliers and contractors. Accuracy: ± 10% 3. Preliminary Estimate . Enough for budget authorization. Accuracy: ± 20% 4. Study Estimate . Knowledge of major pieces of equipment Accuracy: ± 30% 5. Order of Magnitude estimate . Extrapolate similar plant cost Accuracy: over 30% ChE 4253 - Design I
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Methods For Estimating Capital Investment 1. Detailed-Item Estimate . ( ± 5% accuracy, contractor’s estimate) 2. Unit-Cost Estimate . See p. . (10-20% accuracy, definitive or preliminary estimate) 3. Percentage of Delivered-Equipment Cost . ± 10% accuracy) 4. Estimation based on “Lang” factors . The Fixed Capital Investment is found by multiplying equipment cost by a factor ( ± 30% accuracy, order of magnitude estimate) ChE 4253 - Design I
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This note was uploaded on 09/07/2009 for the course CBME Kinetics & taught by Professor Lobban during the Spring '09 term at The University of Oklahoma.

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econ-summary - Economic Analysis Procedure 1. De on le l of...

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