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Unformatted text preview: TDC 10 ChBE 4505/4525 Depreciation 10.0% of CTDC for 10 yr Rental Fees Office, laboratory space Licensing Fees 1‐5% of sales Average: 2% of CTDC + 3% of sales Cost of Manufacture (COM) Table 23.1: sum up Total Product Cost C = COM + general expenses 9.55‐11.55% of Sales (S) Headquarters expenses R&D, sales, administration, etc. 11 Schork L9 ChBE 4505/4525 Schork L9 Pretax (gross) Earnings and After‐Tax (net) Earnings (profit) Gross earnings or profit = S – C Net earnings or profit = (1‐t)(gross earnings) t = tax rate (state & federal) = 40% =0.6(S – C) Federal corporate taxes : 35% for large corporations 12 ChBE 4505/4525 Schork L9 WORKING CAPITAL AND TOTAL CAPITAL INVESTMENT CWC = cash reserves + inventory + accounts receivable –accounts payable 30 days cash reserves (materials, utilities, etc.) 8.33% of COM 7 days of inventory of solid & liquid product 1.92% of annual sales of solid & liquid products 30 days of accounts receivable 8.33% of annual sales 30 days of accounts payable 8.33% of annual feedstock costs End of L9 13...
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- Spring '08