Economics of chem. plants

1. Economics of Chemical Plants
Eng. Kareem H. Mokhtar

2. Depreciation
• Straight line method
• D=
!
"
* (𝑉𝑜 − 𝑉𝑠)
• Use or production method
• d= (
#$% &" '(% )%*+
,-'*. /$%
) ∗ (𝑉𝑜 − 𝑉𝑠)
• Double declining balance method:
• d = 2 * (1/n) * remaining cost
• Sum of years digits method
• 𝑑i = (
#$%0/. $%+1&2% .&0% +%3*&"&"4
$/3 -0 )%*+$
) * (Vo-Vs)

3. Question 1
• A 2020 car costs 200,000 L.E, if you will buy this car and sell it at 2030
with expected price of 100,000 L.E. you predict that you will be using
it each year 1.5 times more than the previous year with total of
200,000 Km. Calculate the depreciation using
• 1- straight line method
• 2- use or production method
• 3- Double declining method
• 3- sum of years digits

4. • Straight line method
• D=
!
"
* (𝑉𝑜 − 𝑉𝑠)
• D = (1/10) * (200000-100000) = 10000 $ each year
• use or production method
• d= (
#$% &" '(% )%*+
,-'*. /$%
) ∗ (𝑉𝑜 − 𝑉𝑠)
Year Use
2020 x
2021 1.5x
2022 1.5*1.5x
: :
2030 …..

5. year Use (f(x)) Dep ($)
1 1 882.3783
2 1.5 1323.567
3 2.25 1985.351
4 3.375 2978.027
5 5.0625 4467.04
6 7.59375 6700.56
7 11.39063 10050.84
8 17.08594 15076.26
9 25.62891 22614.39
10 38.44336 33921.59
113.3301

6. double dec dep
40000.00
32000.00
25600.00
Double declining balance method:
d = 2 * (1/n) * remaining cost
In 2020 : 2* (1/10) * 200000
In 2021: 2* (1/10) * (200000-40000)
.
.
In 2030

7. • Sum of years digits method
• 𝑑i = (
#$%0/. $%+1&2% .&0% +%3*&"&"4
$/3 -0 )%*+$
) * (Vo-Vs)
sum of years
18181.82
16363.64
14545.45
12727.27
10909.09
9090.91
7272.73
5454.55
3636.36
1818.18
x 𝑙𝑖𝑓𝑒 𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔
year 1 10
year 2 9
year 3 8
year 4 7
Year 5 6
year 6 5
year 7 4
year 8 3
year 9 2
year 10 1
Summation 55