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1.A plant is designed to produce 10000 t/year

of product. Total fixed capital investment is $1250000 and the plant operates

about 8400 h/yr.Working capital is 5%

of annual sales revenue. It is a highly automated continuous process involving

four processing steps. Plant overhead is 50% of labor payroll.Supervision cost is $20000 per year.Repairs and maintenance cost is 10% of FCI

for the first year and then increase by $15000 each year.The plant life is 10 years and the company

accountant uses the sum-of-the-years-digits method for depreciation.Salvage value of the plant is $0.0.Selling and distribution costs are $20 per

ton of product.General overheads are

10% of sales revenue.Tax rate is

50%.Each ton of product requires: 1400 kg. raw material

at $.29/kg.280 Kwh electricity at

$0.015/Kwh4500 kg. steam at

$1.5/1000 kg30 cubic m. cooling

water at $0.25 per cubic m.25 cubic m. of natural

gas at $0.05 per cubic m.A) What

price should the company charge for the product in order to have a discounted

rate of return of 30%? B)

Determine the profitability of the project and plot the cash flow position if

it operates at 50% of full capacity for the first year and at 75% of full

capacity for the second year.Take imas 0.15.Hint:Use the following equation for estimating

operating labor cost ($10/man-hr)

3where L =

10