WELCOME to Cost & Evaluation Workbook

accompanying Plant Design and Economics for Chemical Engineers, 5th edition,
by Peters, Timmerhaus and West.
These spreadsheets are made available for convenient implementation of methods
presented in the text. The sheets are color coded to assist the user. A hypothetical
example, 'Illustration 101', is included. The basis for all costs is Jan. 2002.
Steps to follow:
1. Please download the workbook to your computer.
2. The sheets are intended for use in the sequence presented. However, any sheet
may be by-passed so long as the information skipped is input manually where needed
in subsequent sheets. Default values may be replaced by the user.
3. Purchased Equipment Costs may be obtained from the file "Equipment Costs,"
the graphs in the text, or otherwise, and entered manually into cell H12 on the
Capital Inv.' spreadsheet.
4. On the sheet 'Capital Inv.' enter the estimated current total purchased cost of the
process equipment. For the proposed plant type, copy the corresponding "Fraction of
delivered equipment" column entries into the tan "User" column. The sheet then
calculates and transfers results to appropriate subsequent sheets.
5. On the sheet 'Materials & Labor' enter the product prices and flowrates, the raw
materials prices and flow rates, and the labor requirements and current ENR labor index.
6. On the sheet 'Utilities' the quantity of each utility needed annually must be entered
in appropriate units. The total annual utilities cost is transferred to sheet 'Annual TPC'.
7. The 'Depreciation' sheet is used only if the user wishes to change the default
(5-year MACRS) depreciation method. To make a change, copy the appropriate MACRS
row to the 'Annual depreciation" row of sheets 'Evaluation' and 'Year-0 $', or, enter
constant annual (straight line) value into depreciation row of those sheets.
8. On the 'Annual TPC' sheet, all values are calculated from information available on
other sheets. The user may change defaults or enter preferred values. The calculated
annual TPC is transferred to 'Evaluation'.
9. The sheet 'Evaluation' uses values from other sheets to calculate the common
profitability measures. The user may change defaults, or enter desired values
into the sheet. In particular, the user may change the default inflation rates in
order to study their effects on profitability.
All calculations in 'Evaluation' are made in current (i.e. inflated) dollars. Inflation
adjustments are made from the time of the estimates.
To make evaluations for periods of less than 10 years, leave unneeded columns blank.
For periods greater than 10 years, insert columns as needed and copy from an existing
year column into the new columns. Check equations for correct cell references.
10. A second evaluation sheet, 'Year-0 $', also is included. It is the same as
sheet 'Evaluation', except that all the inflated $ values are converted to constant,
year-0 dollars (as discussed in the text). This method is considered to reflect more

realistically the effect of inflation on the profitability measures. The user may change
the default inflation rates in order to study their impacts on profitability.

ESTIMATION OF CAPITAL INVESTMENT BY PERCENTAGE OF DELIVERED EQUIPMENT METHOD

(See Table 6-9)

The fractions in the cells below are approximations applicable to typical chemical processing
plants. These values may differ depending on many factors such as location, process type, etc.
Default
Required user input
Subtotal
Result

Required, from a linked sheet or entered manually

Notes & comments

Project Identifier: Illustration 101

Fraction of delivered equipment

User: copy Calculated
from values values,
SolidSolid-fluid Fluid
at left or million $
processing processing processing
insert
plant
plant
plant
Direct Costs
8.800
Purchased equipment, E'
0.10
0.10
0.10
0.10
0.880
Delivery, fraction of E'
9.680
Subtotal: delivered equipment
0.45
0.39
0.47
0.47
4.550
Purchased equipment installation
0.18
0.26
0.36
0.36
3.485
Instrumentation&Controls(installed)
0.16
0.31
0.68
0.68
6.582
Piping (installed)
0.10
0.10
0.11
0.11
1.065
Electrical systems (installed)
0.25
0.29
0.18
0.18
1.742
Buildings (including services)
0.15
0.12
0.10
0.10
0.968
Yard improvements
0.40
0.55
0.70
0.70
6.776
Service facilities (installed)
1.69
2.02
2.60
2.60
34.848
Total direct costs

Engineering and supervision

Construction expenses
Legal expenses
Contractor's fee
Contingency
Total indirect costs

Indirect Costs
0.33
0.39
0.04
0.17
0.35
1.28

0.32
0.34
0.04
0.19
0.37
1.26

0.33
0.41
0.04
0.22
0.44
1.44

0.33
0.41
0.04
0.22
0.44
1.44

Fixed capital investment (FCI)

Working capital (WC)

0.70

0.75

3.194
3.969
0.387
2.130
4.259
13.939
48.787

0.89

0.89

8.615

Total capital investment (TCI)

57.402
The investments are made over a period of time. This is represented on the basis that startup
(time 0) will be three years after the date of the estimate, that 15% of the fixed capital investment
is spent in the year beginning at the time of the estimate (year ending at time -2), 35% in the
second year (ending at -1), and 50% in the third year (ending at time 0). These values may be
changed. The amounts are inflated at the beginning of each year after the estimate, by the default
construction inflation rate. These changes are all made in the sheets 'Evaluation' and 'Year-0 $'.
It is assumed that all working capital is spent at time 0.

Sent to 'Evaluation' and

'Year-0 $', there adjusted
as described below

ANNUAL RAW MATERIAL COSTS AND PRODUCTS VALUES

Process Identifier: Illustration 101
Required user input
Notes & comments
Default, may be changed
RESULT
Products, Coproducts and Byproducts
Name of
Material

Price,
$/kg

Annual
Amount,
million
kg/y

Annual
value of
product,
million $/y

Main
Byproduct

1.60
0.25

30.000
12.000

48.00
3.00
0.00
0.00
0.00
0.00
51.00

Total annual value of products =

Number of
operators per
shift*

Price,
$/kg

1
2
3

0.45
0.25
0.05

Sent to 'Evaluation'
and 'Year-0 $'

Annual Annual raw

Amount, materials
million
cost,
kg/y
million $/y
20.000
12.000
13.000

Total annual cost of raw materials =

9.00
3.00
0.65
0.00
0.00
0.00
12.65

Shifts per Operator

Annual
day**
rate, $/h # operating
labor cost,
million $/y

3
0.885
3
33.67
*See Tables 6-13 and Fig. 6-9.
**Default = 3 for continuous process.
Enter appropriate value for batch operation.
#
To obtain current, local value, enter (latest local
1
ENR skilled labor index)/6067 =

Raw Materials
Name of
Material

ANNUAL OPERATING LABOR COSTS

Process Identifier: Illustration 101
Required user input
Notes & comments
Default, may be changed
RESULT
Operating Labor

Sent to sheet
'Annual TPC'

Sent to 'Annual TPC'

UTILITY COSTS
See Table 6-14 and Table B-1 for ranges of utility unit costs and sources of information. Default
values are rough averages and may be changed. Utility costs can differ widely with location.
Process Identifier: Illustration 101

Utility

Notes & comments

Result

Default, may be changed

2.025
million $/y
Sent to sheet 'Annual TPC'
Default
unit cost

TOTAL UTILITY COST =

Required user input

Default
cost units

Annual utility
Default units Annual utility
requirement, in
of utility
cost, million
appropriate units requirement
$/y

Air, compressed
Process air
Instrument air

0.45
0.90

$/100m3 #
$/100m3 #

100 m3#/y
100 m3#/y

0.000
0.000

kWh/y
kWh/y

0.081
0.000

GJ/y
GJ/y
GJ/y
GJ/y

0.000
0.000
1.080
0.000

GJ/y
GJ/y
GJ/y
GJ/y

0.000
0.000
0.000
0.000

1000 kg/y
1000 kg/y
1000 kg/y

0.000
0.240
0.000

m3/y
m3/y

0.212

1000 kg/y
1000 kg/y

0.000
0.000

Electricity
Purchased, U.S. average
Self-generated

0.045 $/kWh
0.05 $/kWh

1800000

Fuel
Coal
Fuel oil
Natural gas
Manufactured gas

1.66
3.30
3.00
12.00

$/GJ
$/GJ
$/GJ
$/GJ

4.00
5.00
8.00
14.00

$/GJ
$/GJ
$/GJ
$/GJ

8.00
6.00
2.00

$/1000 kg
$/1000 kg
$/1000 kg

0.53
0.53

$/m3
$/m3

360000

Refrigeration, to temperature
15 oC
5 C
-20 oC
-50 oC

Steam, saturated
3550 kPa
790 kPa
Exhaust (150 kPa)

40000

Waste water
Disposal
Treatment

400000

Waste disposal
Hazardous
Non-hazardous

145.00 $/1000 kg
36.00 $/1000 kg

Water
Cooling
Process
General
Distilled
#

0.08

$/ m3

2500000

m3/y

0.200

0.53
0.90

$/m3
$/m3

400000

m3/y
m3/y

0.212
0.000

measured at 101.3 kPa and 15C.

DEPRECIATION
Default = 5-y MACRS. Default is in place in sheets 'Evaluation' and 'Year-0 $'.
To use a different recovery period, copy the entire row into the depreciation row of
sheets 'Evaluation' and 'Year-0 $' (add columns to these sheets as needed).
User may elect straight-line depreciation and period (d = FCI/period), and
substitute the value into the depreciation row on sheets 'Evaluation' and
'Year-0 $'.
Entry = MACRS depreciation as fraction/y of FCI
YEAR
Recovery
period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
3-year
0.333 0.444 0.148 0.074
f
0.200 0.320 0.192 0.115 0.115 0.058
7-year
0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045
10-year
0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.066 0.066 0.033
15-year
0.050 0.095 0.086 0.077 0.069 0.062 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059
20-year
0.038 0.072 0.067 0.062 0.057 0.053 0.049 0.045 0.045 0.045 0.045 0.045 0.045 0.045

15

16

0.059

0.030

0.045

0.045

17

18

19

20

21

0.045

0.045

0.045

0.045

0.022

ANNUAL TOTAL PRODUCT COST AT 100% CAPACITY

See Figure 6-7 and 6-8
Default, may be changed
Subtotal
Notes & comments
User input
RESULT
Required, may be calculated here, in linked worksheet, or entered manually.
Project identifier: Illustration 101
Capacity
Fixed Capital Investment, FCI
Item
Raw materials
Operating labor
Operating supervision
Utilities
Maintenance and repairs
Operating supplies
Laboratory charges

30
50.114
Default
factor, user
may change

106 kg per year

million $
Basis cost,
Cost,
million $/y million $/y

Basis

0.15

of operating labor

0.885

0.06
0.15
0.15

of FCI
50.114
of maintenance & 3.007
of operating labor 0.885
of co
26.674
--

Royalties (if not on lump-sum basis)

0.01
Catalysts and solvents
0
Variable cost =
Taxes (property)
0.02
of FCI
50.114
Financing (interest)
0
of FCI
50.114
Insurance
0.01
of FCI
50.114
Rent
0
of FCI
50.114
Depreciation
Calculated separately
Fixed Charges =
Plant overhead, general
0.6
of labor, supervis 4.024
Plant Overhead =
Manufacturing cost =
Administration
0.2
of labor, supervis 4.024
of co
Distribution & selling
0.05
26.674
of co
Research & Development
0.04
26.674
General Expense =
TOTAL PRODUCT COST WITHOUT DEPRECIATION

= co =

12.650
0.885
0.133
2.025
3.007
0.451
0.133
0.267
0.000
19.550
1.002
0.000
0.501
0.000

Sent to 'Evaluation' and

1.503
2.415
2.415
23.468
0.805
1.334
1.067
3.206
26.674
Sent to 'Evaluation'
and 'Year-0 $'

'Year-0 $'

ECONOMIC EVALUATION
Project identifier: Illustration 101
Expenditures, entries must be negative
Default values, can be changed

CURRENT, i.e. INFLATED, DOLLARS

Construction inflation rate, fraction/y =
0.02
Product price inflation rate, fraction/y =
0
TPC inflation rate, fraction/y
=
0.02
Annual-compounding discount rate, fraction/y = minimum acceptable rate of return, mar =

Required, user must supply

Required, may be calculated here, in linked
worksheet, or entered manually
Comments and notes begin in column S

0.15

Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma=

Income tax rate =
0.35

0.14

RESULT

Year ending at time

-3
-2
-1
0
6
1. Land, 10 $ (see notes)
0.00
0.00
0.00
2. Fixed Capital Investment, 106$
-7.32 -17.42 -25.38
3. Working Capital, 106$ (see notes)
-8.85
4. Salvage Value, 106$
5. Total Capital Investment, 106$
-7.32 -17.42 -34.23
6. Annual Investment, 106$
7. Start-up cost, 106$
8. Operating rate, fraction of capacity
9. Annual sales, 106$
10. Annual Total Product Cost,
depreciation not included,106$
11. Annual depreciation factor, 1/y
12. Annual depreciation, 106$/y
13. Annual Gross Profit, 106$
14. Annual Net Profit, 106$
15. Annual operating cash flow,106$
16. Total annual cash flow, 106$
0.00
-7.32 -17.42 -34.23
17. Cumulative cash position, 106$
0.00
-7.32 -24.74 -58.96
Profitability measures, time value of money NOT included:
18. Return on investment, ave. %/y
13.5
19. Payback period, y
3.9
20. Net return, 106$
-0.86 at mar =
15.0 %/y

10
0.00

Row
Sum

0.00
-5.01
0.50
25.50

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00
-50.11
8.85 0.00
0.00 0.00
-58.96
0.00 0.00

0.90
45.90

1.00
51.00

1.00
51.00

1.00
51.00

1.00
51.00

1.00
51.00

1.00
51.00

1.00
51.00

1.00
51.00 479.40

-17.93

-26.76

-29.45

-30.04

-30.64

-31.25

-31.88

-32.51

-33.17

-33.83 -297.45

0.20
10.02
-7.47
-7.47
2.56
2.56
-56.41

0.320
16.04
3.11
2.02
18.06
18.06
-38.35

0.192
9.62
11.93
7.75
17.38
17.38
-20.98

0.115
5.77
15.19
9.87
15.65
15.65
-5.33

0.115
5.77
14.59
9.48
15.25
15.25
9.92

0.058
2.89
16.86
10.96
13.85
13.85
23.77

19.12
12.43
12.43
12.43
36.20

18.49
12.02
12.02
12.02
48.22

17.83
11.59
11.59
11.59
59.81

17.17
11.16
11.16
11.16
70.97

50.11
126.82
79.82
129.93
70.97

Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting
21. Present worth factor
22. Present worth of annual cash
flows, 106$
23. Net present worth, 106$ =
24. Discounted cash flow rate of
return, DCFR, %/y =
Iterated discount rate=
0.152
25. Present worth factor
26. Present worth of annual cash
flows, 106$

1.52

1.32

1.15

1.00

0.87

0.76

0.66

0.57

0.50

0.43

0.38

0.33

0.28

0.25

0.00

-9.68

-20.03

-34.23

2.22

13.65

11.42

8.95

7.58

5.99

4.67

3.93

3.30

2.76

0.53 at discount rate=

0.53

15.0 %/y

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by
15.2 changing cell $C$39. Solver must be rerun after a change on any sheet.
1.53

1.33

1.15

1.00

0.87

0.75

0.65

0.57

0.49

0.43

0.37

0.32

0.28

0.24

0.00

-9.71

-20.06

-34.23

2.22

13.61

11.37

8.89

7.52

5.93

4.62

3.88

3.25

2.71

0.00

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting
27. Present worth factor
28. Present worth of annual cash
flows, 106$
29. Net present worth, 106$ =
30. Discounted cash flow rate of
return, DCFR, %/y =
Iterated discount rate=
0.141
31. Present worth factor
32. Present worth of annual cash
flows, 106$

1.63
0.00

1.42
-10.39

1.23
-21.50

0.57 at discount rate=

1.07
-36.74

0.93
2.39

0.81
14.65

0.71
12.26

0.61
9.60

0.53
8.14

0.46
6.42

0.40
5.02

0.35
4.22

0.31

0.27

3.54

2.96

0.57

14.0 %/y

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$51, to be made = 0 by
14.1 changing cell $C$49. Solver must be rerun after a change on any sheet.
1.64

1.43

1.24

1.07

0.93

0.81

0.70

0.61

0.53

0.46

0.40

0.35

0.30

0.26

0.00

-10.43

-21.55

-36.77

2.38

14.62

12.21

9.55

8.08

6.37

4.96

4.17

3.49

2.92

0.00

COMMENTS & NOTES

Time -3 is default time of estimate, time -2 is the first inflation.
Land can be included, default is 0.
Time 0 is startup time.
Working capital (-) at time 0, (+) when recovered.
Salvage value is (+) at time of recovery.
Planned investments (e.g. replacements) entered here at inflated value.
Startup default is 10% of FCI.
Two year ramp-up of production.
Operating rate affects only variable part of TPC.
Depreciation default is 5-year MACRS.
Start costs subtracted here.
No income tax credit taken for losses.
=Annual operating cash flow + Annual investment
ROI, PBP and Net return do NOT include recovery amounts, by text definition.
Compare with ROI =
15.0 %/y
Compare with reference PBP =
3.6 y.
Compare with net return = 0.

NPW and DCFR include recovery amounts, by text definition.

Uses single-year present worth factor from Table 7-3.
If there is more than one sign change in the annual cash flow, check DCFR value separately.
Compare with net present worth = 0.
"No value" results from a negative total cash flow in R27.
Compare with R5.

NPW and DCFR include recovery amounts, by text definition.

Uses 1-year present worth factor from Table 7-5.
If there is more than one sign change in the annual cash flow, check DCFR value separately.
Compare with net present worth =0.
"No value" results from a negative cash flow in R26.
Compare with R6

ECONOMIC EVALUATION
Project identifier: Illustration 101
Expenditures, entries must be negative
Default values, can be changed

CONSTANT, YEAR-0 DOLLARS

Construction inflation rate, fraction/y =
0.02
Product price inflation rate, fraction/y =
0
TPC inflation rate, fraction/y
=
0.02
Annual-compounding discount rate, fraction/y = minimum acceptable rate of return, mar =

Required, user must supply

Year ending at time

1. Land, 106$ (see notes)
2. Fixed Capital Investment, 106$
3. Working Capital, 106$ (see notes)
4. Salvage Value, 106$
5. Total Capital Investment, 106$
6. Annual Investment, 106$
7. Start-up cost, 106$
8. Operating rate, fraction of capacity
9. Annual sales, 106$
10. Annual Total Product Cost,
depreciation not included,106$
11. Annual depreciation factor, 1/y
12. Annual depreciation, 106$/y
13. Annual Gross Profit, 106$
14. Annual Net Profit, 106$
15. Annual operating cash flow,106$
16. Total annual cash flow, 106$

0.14

RESULT

-3

-2
0.00
-7.61

-1
0.00
-17.77

0
0.00
-25.38
-8.96

-7.61

-17.77

-34.34

0.00
-7.61 -17.77 -34.34
17. Cumulative cash position, 10 $
0.00
-7.61 -25.38 -59.72
Profitability measures, time value of money NOT included:
18. Return on investment, ave. %/y
11.5
19. Payback period, y
4.3
6
20. Net return, 10 $
-2.08 at mar =
15.0 %/y
6

0.15

Continuous-compounding discount rate, fraction/y = minimum acceptable rate of return, rma=

Income tax rate =
0.35

Required, may be calculated here, in linked

worksheet, or entered manually
Comments and notes begin in column S

0.00
-4.98
0.50
25.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Row
Sum
0.00
-50.76
8.96 0.00
0.00 0.00
-59.72
0.00 0.00

0.90
44.12

1.00
48.06

1.00
47.12

1.00
46.19

1.00
45.29

1.00
44.40

1.00
43.53

1.00
42.67

1.00
41.84 428.21

-17.58

-25.72

-27.75

-27.75

-27.75

-27.75

-27.75

-27.75

-27.75

-27.75 -265.31

0.20
9.95
-7.51
-7.51
2.44
2.44
-57.28

0.320
15.61
2.79
1.81
17.42
17.42
-39.85

0.192
9.18
11.12
7.23
16.41
16.41
-23.44

0.115
5.40
13.96
9.08
14.48
14.48
-8.96

0.115
5.30
13.15
8.54
13.84
13.84
4.88

0.058
2.60
14.94
9.71
12.31
12.31
17.18

16.65
10.82
10.82
10.82
28.01

15.78
10.25
10.25
10.25
38.26

14.92
9.70
9.70
9.70
47.96

10
0.00

14.09
9.16
9.16
9.16
57.12

48.04
109.88
68.80
116.84
57.12

Profitability measures including time value of money, with ANNUAL END-OF-YEAR cash flows and discounting
21. Present worth factor
22. Present worth of annual cash
flows, 106$
23. Net present worth, 106$ =
24. Discounted cash flow rate of
return, DCFR, %/y =
Iterated discount rate=
0.129
25. Present worth factor
26. Present worth of annual cash
flows, 106$

1.52

1.32

1.15

1.00

0.87

0.76

0.66

0.57

0.50

0.43

0.38

0.33

0.28

0.25

0.00

-10.07

-20.43

-34.34

2.12

13.18

10.79

8.28

6.88

5.32

4.07

3.35

2.76

2.26

-5.83 at discount rate=

15.0 %/y

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R$41, to be made = 0 by
12.9 changing cell $C$39. Solver must be rerun after a change on any sheet.
1.44

1.27

1.13

1.00

0.89

0.78

0.69

0.62

0.54

0.48

0.43

0.38

0.34

0.30

0.00

-9.71

-20.06

-34.34

2.16

13.67

11.40

8.91

7.54

5.94

4.63

3.88

3.25

2.72

0.46

0.40

0.35

0.31

0.27

5.71

4.37

3.60

2.96

2.43

Profitability measures including time value of money, with CONTINUOUS cash flows and discounting
1.63
1.42
1.23
1.07
0.93
0.81
0.71
0.61
0.53
27. Present worth factor
28. Present worth of annual cash
0.00 -10.81 -21.93 -36.86 2.28
14.14 11.58
8.88
7.39
flows, 106$
29. Net present worth, 106$ =
-6.26 at discount rate=
14.0 %/y
30. Discounted cash flow rate of
return, DCFR, %/y =
Iterated discount rate=
0.121
31. Present worth factor
32. Present worth of annual cash
flows, 106$

-5.83

0.00

-6.26

To get DCFR, go to "Tools" and function "Solver." Set target cell as $R51, to be made = 0 by
12.1 changing cell $C$49. Solver must be rerun after a change on any sheet.
1.53

1.36

1.20

1.06

0.94

0.83

0.74

0.65

0.58

0.51

0.45

0.40

0.36

0.32

0.00

-10.32

-21.33

-36.51

2.30

14.53

12.12

9.47

8.02

6.32

4.92

4.13

3.46

2.89

0.00

COMMENTS & NOTES

Time -3 is default time of estimate, time -2 is the first inflation.
Land can be included by replacing the default 0. Land is (-) at time 0, (+) when recovered
Time 0 is startup time.
Working capital (-) at time 0, (+) when recovered.
Salvage value is (+) at time of recovery.
Planned investments (e.g. replacements) entered here at inflated value.
Startup default is 10% of FCI.
Two year ramp-up of production.
Operating rate affects only variable part of TPC.
Depreciation default is 5-year MACRS.

No income tax credit taken for losses.

=Annual investment + Annual operating cash flow
ROI, PBP and Net return do NOT include recovery amounts, by text definition.
Compare with ROI =
15.0 %/y
Compare with reference PBP =
3.6 y.
Compare with net return = 0.

NPW and DCFR include recovery amounts, by text definition.

Uses single-year present worth factor from Table 7-3.
If there is more than one sign change in the annual cash flow, check DCFR value separately.
Compare with net present worth = 0.
"No value" results from a negative total cash flow in R27.
Compare with R5.

NPW and DCFR include recovery amounts, by text definition.

Uses 1-year present worth factor from Table 7-5.
If there is more than one sign change in the annual cash flow, check DCFR value separately.
Compare with net present worth =0.
"No value" results from a negative cash flow in R26.
Compare with R6