Economic Analysis

The facility is set to operate for 10 years, with two year spent on construction. The operating time is
assumed to be 50 weeks yearly (about 95% a year). The cost of the land is assumed to be $9 million.
After sizing all the equipment, the cost of all the equipment or the bare module cost C
BM
was calculated
using CAPCST, a program that has built-in information regarding the equipment and the prices. A few
adjustments were made to match the industry standards; the size of the reactor used in the process is
too large for the type of reactor chosen (Autoclave), therefore 4 different reactors in series will be used.
Also, the size of E-103 is too small which resulted in using the smallest heat exchanger available. A CEPCI
of 566.8 was used; that value is dated back to November 2013 and was obtained from the chemical
engineering journal published in February 2014. The rest of the costs were calculated using equations
from Analysis, Synthesis, and Design of Chemical Processes. Using CBM, the total module cost, CTM, was
calculated using equation#. Then, CGR, the cost to build a grass roots facility, was calculated using CTM;
this value also represents the fixed capital investment without land (FCIL).

The cost to purchase methyl formate was estimated by taking the average price of several sources around
the globe, mainly, Alibaba.com; the price estimated is $0.36/lb. Then, the raw material cost per year,
CRM, was determined. In addition, equation# is used to calculate the number of operators salaried at the
facility N
OL
ACT

Where P is the number of solid particles steps in the process and N
np
is the number of non-particle steps.
After that, as shown in equation# below, and using N
OL
ACT
, the cost of operator labor annually, C
OL
, was
calculated. According to Bureau of Labor Statistics official website an average annual wage of $54,450 is
expected as of May 2013.

C
RM
, C
GR
, and C
OL
determined previously, as well as C
UT
, Utility costs calculated using data from aspen
and the textbook, and C
WT
, and waste treatment costs were all used to calculate the cost of manufacturing
without depreciation COM
d

) (

All the calculated values can be found in Appendix#.
Profitability Analysis
The annual revenue was calculated by multiplying the price of the yearly production of formic acid by the
cost of it, and then it was added to the cost of methanol multiplied by the yearly production of methanol.
The Modified Accelerated Cost Recovery System (MACRS) was used to calculate depreciation. The
revenue, COMd, T, the tax rate assumed to be 35% according to Analysis, Synthesis, and
Design of Chemical Processes, and d
k
, depreciation, were used to evaluate the annual after-tax cash
flow, CF, using equation# below; whereas after tax commutative cash flow, CCF, was calculated using
equation# as follows:

On the other hand, equations # and # below where used to determine discount CF and discount CCF
respectively. The discount rate, i, is assumed to be 10% as well, k, or the number of years passed
since purchasing the land, were used in the calculation of the following equations:

]

PVR or the net present value of the facility was calculated using the net value of positive cash flow and
the absolute value of net value of negative cash flow as follows:





Results:
After doing all the calculations mentioned above, the final results for the next 12 years were obtained and
graphed in figure1 and figure2 below: the figures illustrate the non-discounted and discounted
profitability. There is an obvious decline until the 10
th
year where it starts to stabilize.


Figure

-$140,000,000.00
-$120,000,000.00
-$100,000,000.00
-$80,000,000.00
-$60,000,000.00
-$40,000,000.00
-$20,000,000.00
$0.00
0 1 2 3 4 5 6 7 8 9 10 11 12
Non-Discounted Profitability Analysis
Cash Flow
Cumulative Cash Flow

Figure:



-$80,000,000.00
-$70,000,000.00
-$60,000,000.00
-$50,000,000.00
-$40,000,000.00
-$30,000,000.00
-$20,000,000.00
-$10,000,000.00
$0.00
0 1 2 3 4 5 6 7 8 9 10 11 12
Discounted Profitability Analysis
Discounted Cash Flow
Cumulative Discounted Cash
Flow