Problem: An effluent disposal contractor is considering entering the recycled field. At present he incinereates and organic waste containing recoverable solvents and dumps the aqueous based effluent containing acids and metals. After marketing and technical studies he has four possible processes. Process A is solvent recovery by distillation, B is hydrochloric acid recovery, C is copper oxide recovery, and D is copper and nickel metal recovery. Either process C or D could be built. Details of the alternatives are tabulated below with the relevant data.
|
|
A
|
B
|
C
|
D
|
|
Capacity (ton/yr)
|
7000
|
5000
|
1000
|
1000
|
|
FCI ($)
|
240000
|
90000
|
150000
|
350000
|
|
OC (excluding Depreciation ($/ton )
|
170
|
10*
|
260*
|
670*
|
|
Average product value ($/ton)
|
200
|
25
|
300
|
800
|
|
Plant life
|
8
|
9
|
6
|
7
|
*These are reduced by 10% if the solvent recovery plant is not built as the heat from the incinerator may be utilized.
Which plant or plants should the contractor build? Comment on the validity of your conclusions and indicate what other factors may influence his decision.
ASSUME No Salvage value
50% tax rate
No working capital
im = 0.2
USE Straight-line depreciation