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IV B.Tech I Semester Supplimentary Examinations, November 2007
CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS
(Chemical Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
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2. In terms of plant location, what are the important factors that should be consid-
ered? Discuss. [16]
5. The fixed capital investment for an existing chemical plant is Rs 10,00,000. Annual
property taxes amount to 1% of fixed capital investment and the state income taxes
are 5% of gross earnings. The net income per year after all taxes is Rs 20,00,000
and the fedral income taxes amount to 34% of gross earnings. If the same plant had
been constructed at a location where property taxes were 4% of the fixed capital
investment and the state income taxes were 2% of gross earnings, what would be the
net income per year after taxes? Assume that all other cost factors were unchanged.
[16]
6. (a) What is sinking fund method for the determination of depreciation? [4]
(b) Derive an equation for asset value of equipment after few years of use by the
application of sinking fund method. [6]
(c) Compare sinking fund method with straight-line method. [6]
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Code No: RR410803 Set No. 1
7. (a) Discuss rate of return and payout time methods of selecting alternatives? [6]
(b) A distillation column, which is made of mild steel costs Rs.75,000/- and the
useful life period will be 4 years. If the Column is made of stainless steel, the
initial cost would 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 capitialised cost for
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.
[10]
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Code No: RR410803 Set No. 2
IV B.Tech I Semester Supplimentary Examinations, November 2007
CHEMICAL ENGINEERING PLANT DESIGN AND ECONOMICS
(Chemical Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
⋆⋆⋆⋆⋆
2. Discuss about the sources of exposure to health hazards and exposure-hazard con-
trol in a chemical plant. [16]
3. The total capital cost for a plant is Rs. 12 crores and produces 9 million kg of a
chemical product per year, selling at an average price of Rs. 10 per kg. The annual
fixed charges amount to Rs. 1.9 crores. Distribution costs amount to 4% of the
total cost of manufacturing. Costs per kg of input are: Raw materials Rs. 3, labor
Rs. 1.25, utilities Re. 0.75 and packaging Re. 0.20. Estimate the following:
(a) Total cost of manufacturing per year and per kg of product. [6]
(b) Total product cost per year. [5]
(c) Profit per kg of product (gross). [5]
5. During the period of one taxable year at a manufacturing plant, the total income
on cash basis was $ 21 million. Five million dollars of immediate debts due to the
company was paid at the end of the year. The company paid out $ 15 million on
a cash basis during the year, and all of this amount was tax-deductible as product
cost. The company still owed $ 3 million of tax-deductible bills at the end of the
year. If the total Federal Income Tax for the company amounts to 48 % of the
gross earnings, determine the amount of Federal Income Tax due for the year on a
cash basis and also on accrual basis. [16]
6. (a) What do you understand by single unit and group depreciation? State them
clearly. [6]
(b) Differentiate between classified accounts and vintage-group accounts. [4]
(c) Give salient features of accelerated cost recovery system for determining
depreciation allowances. [6]
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Code No: RR410803 Set No. 2
Using this information, determine the standard rate of return on the investment.
[16]
8. Discuss the factors for optimum production rates in plant operations for minimum
cost per unit and maximum profit per unit. [16]
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Code No: RR410803 Set No. 3
IV B.Tech I Semester Supplimentary Examinations, November 2007
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 Technical and Economic factors involved in Chemical plant design
process. [16]
3. (a) Define break-even point, gross earnings and net profit. [6]
(b) A process plant making 2000 tons per year of a product selling for Rs. 0.80
per kg has annual direct production costs of Rs. 20,00,000 at 100 percent
capacity and other fixed costs of Rs. 7,00,000. What is the fixed cost per kg
at the break-even point? If the selling price of the product is increased by 10
percent, what is the increase in net profit at full capacity if the income tax
rate is 34 percent of gross earnings? [10]
4. (a) Derive the expression for effective annual interest rate in terms of the nominal
interest rate compounded continuously. [6]
(b) It is desired to borrow Rs. 20,000 to meet a financial obligation. This money
can be borrowed from a loan agency at a monthly interest rate of 2 percent.
Determine the following: [10]
i. The total amount of principal plus simple interest due after 2 years if no
intermediate payments are made.
ii. The total amount of principal plus compounded interest due after 2 years
if no intermediate payments are made.
iii. The nominal interest rate when the interest is compounded monthly.
iv. The effective interest rate when the interest is compounded monthly.
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Code No: RR410803 Set No. 3
6. (a) The original cost of a property is Rs. 3,00,000. It is depreciated by a 6 %
sinking fund method. What is the annual depreciation charge if the book
value of the property after 10 years is the same as it had been depreciated at
Rs. 25,000 per year by the straight-line method? [8]
(b) Draw a plot of asset value of a property for its service life by sinking fund
method. [8]
7. Discuss Rate of return based on the discounted cash flow with a suitable example.
[16]
8. Explain the concept of economic balance with suitable examples. What are the
factors considered in determining the optimum insulation thickness? [16]
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Code No: RR410803 Set No. 4
IV B.Tech I Semester Supplimentary Examinations, November 2007
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 Technical and Economic factors involved in Chemical plant design
process. [16]
4. A new storage tank can be purchased and installed for Rs. 10,000. 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 9 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]
5. The gross earnings for a small corporation were $ 54,000 in 1960. What would have
been the % reduction in Federal Income Taxes paid by the company if the tax rates
in effect in 1973 had been in effect in 1960 ? [16]
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Code No: RR410803 Set No. 4
6. (a) What do you understand by single unit and group depreciation? State them
clearly. [6]
(b) Differentiate between classified accounts and vintage-group accounts. [4]
(c) Give salient features of accelerated cost recovery system for determining
depreciation allowances. [6]
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