Code No: R05410803

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Set No. 2

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IV B.Tech I Semester Supplementary Examinations,June 2010 CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS Chemical Engineering Time: 3 hours Max Marks: 80 Answer any FIVE Questions All Questions carry equal marks ????? 1. Discuss the various components that constitute the total product cost.

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2. What are the factors considered in scaling materials handling equipment in process industry of your choice. [16] 3. How working capital for an industrial plant be invested? What is its percentage in the total capital investment? [16]

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4. Explain how the optimum economic pipe diameter is found by considering pumping or blowing costs and fixed charges for piping systems. [16]

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5. A proposed manufacturing plant requires an initial fixed capital investment of Rs.900,000 and Rs.100,000 of working capital It is estimated that the annual income will be Rs.800,000 and the annual expenses including depreciation will be Rs.520,000 before income taxes. A minimum annual return of 15% before income taxes is required before the investment will be worthwhile. Income taxes amount to 34% of all pre-tax profits. Determine the following: (a) The annual percent return on the total initial investment before income taxes. (b) The annual percent return on the total initial investment after income taxes. (c) The annual percent return on the total initial investment before income taxes based on capital recovery with minimum profit.

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(d) The annual percent return on the average investment before income taxes assuming straight-line depreciation and zero salvage value. [16]

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6. A piece of equipment has an initial installed value of Rs. 12,000. It is estimated that its useful life period will be 10 years and its scrap value at the end of the useful life will be Rs. 2000. The depreciation will be charged as a cost by making equal charges each year, the first payment being made at the end of the first year. The depreciation fund will be accumulated at an annual interest rate of 6 percent. At the end of the life period, enough money must have been accumulated to account for the decrease in equipment value. Determine the yearly cost due to depreciation under these conditions. [16] 7. (a) Define salvage value and scrap value. (b) A piece of equipment originally costing Rs. 40,000 was put into use 12 years ago. At the time the equipment was put into use, the service life was estimated to be 20 years and the salvage and scrap value at the end of the service life were 1

Code No: R05410803

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Set No. 2

assumed to be zero. On this basis, a straight line depreciation fund was set up. The equipment can now be sold for Rs. 10,000, and a more advanced model can be installed for Rs.55,000. Assuming the depreciation fund is available for use, how much new capital must be supplied to make the purchase? [4+12]

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8. Self insurance is being considered for one portion of a chemical company. The fixed-capital investment involved is Rs. 2,50,000, and insurance costs for complete protection would amount to Rs. 2,000 per year. If self insurance is used, a reserve fund will be set up under the companys jurisdiction, and annual insurance premiums of Rs. 1,500 would be deposited in this fund under an ordinary annuity plan. All money in the fund can be assumed to earn interest at a compound annual rate of 5%. Neglecting any charges connected with administration of the fund, how much money would be deposited in the fund at the beginning of he program in order to have enough money accumulated to replace a complete Rs. 2,50,000 loss after 10 years. [16]

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Code No: R05410803

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Set No. 4

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IV B.Tech I Semester Supplementary Examinations,June 2010 CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS Chemical Engineering Time: 3 hours Max Marks: 80 Answer any FIVE Questions All Questions carry equal marks ????? 1. (a) Explain capitalized costs and payout period for profitability analysis.

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(b) Give an analysis of the advantages and disadvantages of various profitability measures for comparing alternatives. [8+8]

2. (a) Discuss about the intangible and practical considerations in optimum design. (b) Describe the general procedure for optimizing a single variable, both analytically and graphically. [8+8]

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3. (a) Give the three different types of classification of taxes and discuss abut them in detail.

(b) Write abut self insurance and discuss about the several ways of applying self insurance. [10+6] [16]

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4. What are the factors to be considered in plant location? Discuss in detail.

5. A Distillation column which is made of mild steel cost Rs. 75,000/- and the useful life period will be 4 years. If the column is made of stainless steel, the initial cost will be Rs. 2,25,000. The scrap value at the end of the useful life would be zero for either type of the column and both could be replaced at a cost equal the original price. On the basis of equal capitalized cost of both types of distillation columns, what should be the useful life period for the stainless steel column, if money is worth 12 percent compounded annually? [16]

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6. What is the 2008 cost for a direct fixed rotary kiln 8m long and 3m in diameter. In 2001 cost for a similar dryer was Rs. 3 lakhs per 90 m2 of peripheral area. Use William sixth tenth factor for calculating the cost as a function of size. [16]

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7. The total capital cost for a plant is Rs. 12 crores and produces 9 million kgs of a chemical product per year, selling at an average amount to Rs. 1.9 crores. Distribution costs amount to 4% of the total cost of manufacturing. Costs per kg of inputs are, Raw materials Rs. 3/-, Labor Rs. 1.25 Utilities Rs. 0.65 and packing Rs. 0.20 Estimate the following: (a) Total cost of manufacture per year and per kg of product. (b) Profit per kg of product (gross) 3

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(c) Annual rate of return based on the original total investment. (d) Payout time without considering taxes but taking into account an interest rate of 18% per annum. [4+4+4+4] 8. (a) Explain various types of depreciation.

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(b) An asset with an original cost of Rs. 10,000 and no salvage value has a depreciation charge of Rs. 2381 during its second year of service when depreciated by the sum-of-the-years-digits method. What is its expected useful life?[8+8]

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Code No: R05410803

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Set No. 1

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IV B.Tech I Semester Supplementary Examinations,June 2010 CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS Chemical Engineering Time: 3 hours Max Marks: 80 Answer any FIVE Questions All Questions carry equal marks ????? 1. Explain the components of fixed charges.

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2. Describe the procedure for determining the optimum rate of production in plant operation from analysis of the costs involved under different situations and considering other factors affecting the particular plant. [16] 3. Explain the following cost items in fixed capital investment:

(b) Land (c) Engineering and supervision (d) Construction expenses.

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(a) Building

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4. The original cost for a distillation tower is Rs. 24,00,000 and the useful life of the tower is estimated to be 10 years. The sinking-fund method for determining the rate of depreciation is used, and the effective annual interest for the depreciation fund is 6 percent. If the scrap value of the distillation tower is Rs. 4, 00,000, determine the asset value (i.e., total book value of equipment) at the end of 5 years. [16] 5. (a) Write about payout period for profitability analysis.

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(b) A proposed chemical plant will require a fixed-capital investment of Rs.10,000,000. It is estimated that the working capital will amount to 25% of the total investment and annual depreciation costs are estimated to be 10% of the fixed-capital investment. If the annual profit will be Rs.3,000,000, determine the standard percent return on the total investment and the minimum payout period.[6+10]

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6. (a) Discuss in detail about the textbook declining-balance method. Compare with straight line method. (b) A property has an initial value of Rs. 50,000, service life of 20 years, and final salvage value of Rs. 4000. It has been proposed to depreciate the property by the textbook declining-balance method. Would this method be acceptable for income tax purposes if the income tax laws do not permit annual depreciation rates greater than twice the minimum annual rate with the straight line method? [8+8]

7. Discuss the detailed engineering design of commercial plant.

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Set No. 1

8. (a) Complete fire and allied coverage insurance for one unit of a plant requires an annual payment of Rs. 3,500 based on an investment of Rs. 50,00,000. If income taxes over a 10-year period average 30% of gross earnings, by how much is the net income after taxes reduced during this 10-year period. (b) Discuss about self insurance in detail.

[10+6]

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Code No: R05410803

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Set No. 3

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IV B.Tech I Semester Supplementary Examinations,June 2010 CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS Chemical Engineering Time: 3 hours Max Marks: 80 Answer any FIVE Questions All Questions carry equal marks ????? 1. (a) Describe the sinking fund method for determining depreciation costs and compare with straight line method.

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(b) A profit producing property has an initial value of Rs. 50,000, a service life of 10 years, and a zero salvage and scrap value. By how much would annual profits before taxes be increased if a 5% sinking fund were used to determine depreciation costs instead of the straight line method? [8+8]

(a) Rate of return on investment (b) Discounted cash flow (c) Net present worth

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(d) Capitalized cost.

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2. Give an account of the following methods used for profitability evaluation

3. Explain different items under service facilities contributing to fixed capital investment. [16] 4. What costs will go into the estimation of a building cost? What is the criterion adopted in building cost estimation? [16]

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5. (a) Discuss about optimizing semi-continuous cyclic operations with particular reference to scale formation in evaporation and determining the cycle time for maximum amount of heat transfer. (b) In continuation of part (a) obtain the cycle time for minimum cost per unit of heat transfer. [8+8]

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6. Compare the advantages and disadvantages of different types of heat exchangers used in chemical process industries. [16] 7. The fixed-capital investment for an existing chemical plant is Rs. 2,00,00,000. Annual property taxes amount to 1% of the fixed-capital investment, and state income taxes are 5% of the gross earnings. The net income per year after all taxes is Rs. 20,00,000, and the federal income taxes amount to 34% of gross earnings. If the same plant had been constructed at a location where property taxes were 4 percent of the fixed capital investment and state income taxes were 2% of the gross earnings, what would be the net income per year after taxes, assuming all other cost factos were unchanged? [16]

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Code No: R05410803

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Set No. 3

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8. A new storage tank can be purchased and installed for Rs. 10,00,000. This tank would last for 10 years. A worn-out storage tank of capacity equivalent to the new tank is available, and it has been proposed to repair the old tank instead of buying the new tank. If the tank were repaired, it would have a useful life of 3 years before the same type of repairs would be needed again. Neither tank has any scrap value. Money is worth 12 percent compounded annually. On the basis of equal capitalized costs for the two tanks, how much can be spent for repairing the existing tank?[16]

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