Question

1.What are the three main factors that determine the capital cost of a piece of equipment such as a heat exchanger at a given time?

2.What is the Chemical Engineering Plant Cost Index (CEPCI) used for, and what does it measure?

3.What is the difference between the total module cost and the grassroots cost of a chemical process?

4.When would you use a cost exponent of 0.6?

5.What is meant by the economy of scale?

6.What is a Lang factor?

7.The pressure factor F_p for a shell-and-tube-heat exchanger is significantly smaller than for a vessel over the same pressure range. Why is this so?

8.What are the five capital cost estimating techniques? Order them in terms of their accuracy.

9.How does the cumulative cash flow of a project vary with time?

10.What are the three components of installed cost of equipment? List all the details of each cost component?

11.In Appendix A, Figures A.1 – A.17, the purchased costs for various types of equipment are given. The y-axis is given as the cost of the equipment per unit of capacity, and the x-axis is given as the capacity. The capacity is simply the relevant sizing parameter for the equipment. Identify all equipment that does not conform to the principle of the economy of scale.

12.A process vessel was purchased in the United Kingdom for our plant in the United States in 1993. From the data given below, estimate the cost in U.S. $ of a vessel of 120 m³ capacity purchased today (assume the current CEPCI = 500).

Vessel Capacity                                                       Purchased Cost                                    

Date                   (m³)                                                   (Pounds Sterling)                                 Exchange rate

1993                        75                                                                  7,800                                         $1.40/Pound Sterling

1998                        155                                                               13,800                                      $1.65/Pound Sterling

2007                        120                                                                                                                     $2.00/Pound Sterling

Answer 1

Answer : 1) Three main factors of equipment costs are following :

(i) Initial cost : This cost includes transportation cost, sales tax etc. which have to bear by the capital owner.

(ii) Tax : This is a cost of capital owner which have to pay to the government. Tax depends on the value of equipment and on the location where it is placed.

(iii) Insurance cost : To cover the any accidental cost like fire etc. the capital owner bear the cost of annual premium of insurance which is paid to the insurance company.