CBmE+195+-+Chemical+Engineering+Economics+-+Problem+Set+_3+-+Fall+2010

CBmE+195+-+Chemical+Engineering+Economics+-+Problem+Set+_3+-+Fall+2010

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
University of California at Berkeley Department of Chemical and Biomolecular Engineering Chemical and Biomolecular Engineering 195 Special Topics – Chemical Engineering Economics Fall 2010 PROBLEM SET #3 – Due October 7, 2010 at the start of class 11. Risky Chemical Corporation is pondering whether to commercialize a new product, di-C. If the di-C process operates successfully, the company estimates that it can earn $1 million in net profits per year for the foreseeable future. Because the di-C process is unproven and the company has little experience with highly exothermic reactions, there is a 5 percent chance per year of a major catastrophe. If a major catastrophe occurs, Risky Chemical Corporation would have to quit making di-C; and any profits made that year would be lost. (Risky Chemical Corporation thinks that its insurance would cover other losses.) The company uses a flat, annual discount rate of 25 percent for its investments. a)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

CBmE+195+-+Chemical+Engineering+Economics+-+Problem+Set+_3+-+Fall+2010

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online