Tk27 Revised Assignment5

UNIVERSITAS INDONESIA
PRODUCTION OF ACETONE THROUGH COAL

GASIFICATION
Report Assignment 5
GROUP 27
GROUP PERSONNEL:
FADHILA AHMAD ANINDRIA (1406604670)
MELODY GITA ORATMANGUN (1406531593)
MUHAMMAD IRFAN RAHARJO (1406604531)
MUHAMMAD LUTHFI SHIDQI (1406531870)
RIZKY ADI PURWOKO (1406531694)
CHEMICAL ENGINEERING DEPARTMENT

ENGINEERING FACULTY
DEPOK
DECEMBER 2017
EXECUTIVE SUMMARY
Our plant which located in Lampung, will start its production on 2019.
The initial target production capacity will be 4000 tons per year. To determine
whether this plant is going to be successful or not, an accurate economical
analysis need to be done. In this analysis, all costs involved in all phases of this
product manufacture are calculated considerably to the determination of the cost
of product. The applied tax cost and prediction profit of the product sale will also
be included in the determination of the product cost.
All of the costs involved in this calculation are divided into two different
categories of cost component. While the cost component is the aspect that has
influences to the product cost, the two main cost components here are fixed cost
and variable cost. Fixed cost is the cost that will not change and will not be
influenced by the total production; almost be the same amount in years, such as
marketing expenses (advertisements and promotions), administration cost, indirect
labor salary, taxes, insurance, depreciation, and others. Meanwhile, the variable
cost is the cost that always preferably change influenced by the material
requirements and total production, such as material cost, direct labor salary, and
others.
The calculation of this economical analysis is directly purposed to
determine the rate of return of the plant. The rate of return calculated will be used
to determine the payback period of the plant. This analysis is also needed to
consider when the production will need to be evaluated due to the profit received.
The evaluation is also considered by the usage time period of the manufacture
instruments and equipments. In fact, this evaluation will bring more profit of the
product sale and a better way to increase the efficiency.
Total capital expenditure that is needed to fulfill all the equipment in the
plant is US$470,819,768. The operating expenditure to pay all the operational
costs annually is US$215,206,257.43. From the operating cost breakdown, the top
two items that give our plant the most expenditure are raw material and catalyst &
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solvent cost. The equity from our plant will be fulfilled by bank loan 65% and
investor 35%. The WACC that is calculated is 10.39%.
After calculating capital expenditure and operational expenditure, we begin
to set our product price and deciding the revenue. We decided to acetone which
will add more income to our plant. The net value of our acetone is US$75,420 per
tons, with sales revenue US$301,680,000 annually. This calculation have been
discounted with depreciation and income taxes which can be seen in the following
calculation. With such revenue, the payback period is 7.56 years and Net Present
Value is US$396,867,212. The IRR value for our Coal-to-Acetone plant is
20.25% and Rate of Interest for our plant is 26.01%. Using the existing data, we
can calculate the BEP value to be 30,242 ton of acetone per year. All of
profitability component that we get is meaning that our plant is very profitable and
can be implemented. And for the sensitivity analysis the most sensitive
component is selling price of product acetone.
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LIST OF CONTENTS
EXECUTIVE SUMMARY ................................................................................... ii

LIST OF CONTENTS .......................................................................................... v
LIST OF FIGURES .............................................................................................. v
LIST OF TABLES ............................................................................................... vi
CHAPTER 1 CAPITAL EXPENDITURE ......................................................... 1
1.1 Cost Index ................................................................................................. 1
1.2 Capital Expenditure .................................................................................. 2
1.3 Total Equipment Cost ............................................................................... 3
1.4 Total Bare Module Cost ........................................................................... 7
1.5 Supporting Equipment Cost ................................................................... 10
1.6 Site Preparation Cost .............................................................................. 11
1.6.1 Site Development Cost.................................................................... 11
1.6.2 Building Cost .................................................................................. 12
1.7 Allocated Costs for Utility Plants and Related Facilities ....................... 13
1.8 Contingencies and Contractor’s Fee ....................................................... 14
1.9 Land Cost ............................................................................................... 14
1.10 Royalties Cost......................................................................................... 14
1.11 Plant Start Up Cost ................................................................................. 15
1.12 Working Capital ..................................................................................... 15
1.13 Calculation of Total Capital Investment................................................. 15
1.14 Comparison with Existing Plant ............................................................. 17
CHAPTER 2 OPERATIONAL COST ............................................................. 18
2.1 Raw Material Cost .................................................................................. 18
2.2 Solvent and Catalyst Cost....................................................................... 18
2.3 Utility Cost ............................................................................................. 20
2.3.1 Electric Utility ................................................................................. 20
2.3.2 Water Utility.................................................................................... 24
2.3.3 Fuel Utility ...................................................................................... 24
2.4 Labor Cost .............................................................................................. 24
2.4.1 Direct Labor Cost ............................................................................ 25
2.4.2 Indirect Labor Cost ......................................................................... 26
2.5 Maintenance Cost ................................................................................... 27
2.6 Insurance and Tax Cost .......................................................................... 28
2.7 General Expenses ................................................................................... 34
2.8 Other Cost............................................................................................... 35
2.9 Depreciation ........................................................................................... 35
2.10 Cost Breakdown of Operational Expenses ............................................. 40
CHAPTER 3 PROFITABILITY ANALYSIS .................................................. 41
3.1 Investment Feasibility Analysis ............................................................. 41
3.1.1 Capital Loan .................................................................................... 41
3.1.2 Income ............................................................................................. 43
3.1.3 Cash Flow ....................................................................................... 43
3.2 Profitability Analysis .............................................................................. 45
3.2.1 IRR .................................................................................................. 45
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3.2.2 NPV ................................................................................................. 45
3.2.3 Payback Period ................................................................................ 45
3.2.4 ROR/ROI ........................................................................................ 46
3.2.5 Break Event Point ........................................................................... 46
CHAPTER 4 SENSITIVITY ANALYSIS ........................................................ 48
4.1 IRR Sensitivity Analysis ........................................................................ 49
4.2 NPV Sensitivity Analysis ....................................................................... 50
4.3 Payback Period Sensitivity Analysis ...................................................... 50
CHAPTER 5 CONCLUSION ............................................................................ 52
REFERENCES .................................................................................................... 53
APPENDIX .......................................................................................................... 54
APPENDIX A: Capital Loan............................................................................. 54
Appendix B. WACC Calculation ...................................................................... 63
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LIST OF FIGURES
Figure 1.1 Chemical Engineering Plant Cost Index ................................................ 1

Figure 2.1 Cost Breakdown of Operational Expenses .......................................... 40
Figure 3.1 Before and After Tax Cash Flow ......................................................... 44
Figure 3.2 Cumulative Cash Flow ........................................................................ 44
Figure 4.1 Effect of Parameter Deviation on IRR................................................. 49
Figure 4.2 Effect of Parameter Deviation on NPV ............................................... 50
Figure 4.3 Effect of Parameter Deviation on Payback Period .............................. 50
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LIST OF TABLES
Table 1.1 Extrapolated Cost Index .......................................................................... 2

Table 1.2 FM Factor for Heat Exchanger FOB Cost .............................................. 5
Table 1.3 FL Factor for Heat Exchanger FOB Cost ............................................... 6
Table 1.4 Bare Module Factor ................................................................................ 7
Table 1.5 Total Bare Module Cost .......................................................................... 7
Table 1.6 Supporting Equipment .......................................................................... 10
Table 1.7 Total Area in Plant ................................................................................ 12
Table 1.8 Site Development Cost ......................................................................... 12
Table 1.9 Building Cost ........................................................................................ 12
Table 1.10 Site Preparation Cost........................................................................... 13
Table 1.11 Costs for Utility and Related Facilities ............................................... 13
Table 1.12 Contingencies and Contractor's Fee .................................................... 14
Table 1.13 Land Cost ............................................................................................ 14
Table 1.14 Royalties Cost ..................................................................................... 14
Table 1.15 Plant Start Up Cost.............................................................................. 15
Table 1.16 Working Capital Cost.......................................................................... 15
Table 1.17 Components of Total Capital Investment ........................................... 16
Table 1.18 Total Capital Investment ..................................................................... 16
Table 1.19 Comparison with Existing Plant ......................................................... 17
Table 2.1 Raw Material Cost ................................................................................ 18
Table 2.2 Solvent and Catalysts Cost .................................................................... 19
Table 2.3 Process Equipment Electricity Cost ...................................................... 20
Table 2.4 Process Equipment Electricity Cost (cont’d) ........................................ 22
Table 2.5 Supporting Equipment Electricity Cost ................................................ 23
Table 2.6 Water Utility Cost ................................................................................. 24
Table 2.7 Fuel Utility Cost .................................................................................... 24
Table 2.8 Minimum Regional Wages Lampung ................................................... 25
Table 2.9 Amount of Worker per Shift ................................................................. 25
Table 2.10 Salary Amount .................................................................................... 26
Table 2.11 Indirect Labor Cost ............................................................................. 26
Table 2.12 Maintenance Cost................................................................................ 28
Table 2.13 Insurance and Tax Cost ....................................................................... 28
Table 2.14 Tax from Land and Building Cost ...................................................... 28
Table 2.15 Salary Tax ........................................................................................... 30
Table 2.16 Communication Cost........................................................................... 34
Table 2.17 Plant Overhead .................................................................................... 34
Table 2.18 Other Cost ........................................................................................... 35
Table 2.19 Depreciation ........................................................................................ 36
Table 2.20 Cost Breakdown .................................................................................. 40
Table 3.1 Interest Rate of Capital Source ............................................................. 41
Table 3.2 Capital Share for Each of Capital Source ............................................. 41
Table 3.3 Investment Payment Scheme ................................................................ 42
Table 3.4 Investment Payment Scheme ................................................................ 42
Table 3.5 Financial Interest ................................................................................... 43
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Table 4.1 Product Price Deviation Effects ............................................................ 48
Table 4.2 Labor Wages Deviation Effects ............................................................ 48
Table 4.3 Raw Material Price Deviation Effects .................................................. 49
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CHAPTER 1
CAPITAL EXPENDITURE
The Acetone plant will be built in Lampung. Calculation of capital

expenditure should be firstly done. By doing the economic in order to find out
how long this plant will be economically beneficial, the analysis, all costs
affecting the selling price of a product is considered.
1.1 Cost Index
There are two types of cost index that are used, such as Marshall and Swift
Equipment Cost and Chemical Engineering Plant Cost Index (CEPCI). The
economy analysis of this plant will use CEPCI for its simplicity. Cost index itself
is required to determine the equipment’s price in the year that it will be purchased.
The graph below shows the index from 1950 to 2012. Since the Acetone plant is
planned to be built in 2020, an extrapolation of the CEPCI data should be done to
find out the CEPCI in 2020.
Figure 1.1 Chemical Engineering Plant Cost Index

(Source : www.nt.ntnu.no/)
By extrapolating the data, the graph below shows the variation of cost
index per year. The table below shows the extrapolated data of the cost index
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2
Table 1.1 Extrapolated Cost Index
Year CEPCI
2013 624.3
2014 644.2
2015 664.1
2016 684.0
2017 703.8
2018 723.7
2019 743.6
2020 763.4
(Source: BPPT, 2015)

Therefore, the equipment cost in 2020 will be calculated by this equation
when the original cost in the present year is known.
𝐶𝑜𝑠𝑡 𝐼𝑛𝑑𝑒𝑥 𝑎𝑡 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑇𝑖𝑚𝑒
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 = 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝐶𝑜𝑠𝑡 𝑥 𝐶𝑜𝑠𝑡 𝐼𝑛𝑑𝑒𝑥 𝑎𝑡 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝐶𝑜𝑠𝑡
(1.1)
1.2 Capital Expenditure
To analyze the capital investment of this plant, Total Capital Investment
(TCI) should be calculated. Calculation of TCI can use a variety of ways. In this
opportunity, the method used is the method of Guthrie that can be calculated using
the equation:
𝐶𝑇𝐶𝐼 = 𝐶𝑇𝑃𝐼 + 𝐶𝑊𝐶 = 1.18 𝑥 (𝐶𝑇𝐵𝑀 + 𝐶𝑆𝑖𝑡𝑒 + 𝐶𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔 + 𝐶𝑂𝑓𝑓𝑠𝑖𝑡𝑒 ) + 𝐶𝑊𝐶
(1.2)
Where,
CTBM = Total bare module cost
CSite = Field development/site cost
CBuilding = Building cost
COffsite = Offsite facilities cost, etc.
CWC = Working capital including startup cost, etc.
Fixed capital includes costs such as land and development, plant design,
equipment purchase, construction plant and other building and contingency. Fixed
capital will be recovered after several years of using the cost of depreciation,
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3
where depreciation value (D) is set by the government and depend on the tax
system.
1.3 Total Equipment Cost
The total bare-module cost, CTBM, is the summation of bare-module costs
for all items of the process equipment. The present cost of each equipment should
be coverted to the year 2020 which is the year that the plant is going to be built.
The conversion uses the CEPCI that has already been discussed on the previous
section. This sub-chapter will discuss more about the calculation of each
equipment in the plant in a more detail explanation.
a. Conveyor
This plant has 2 conveyor belts. The calculation is as shown below:
𝐶𝑝 = 16.9 𝑊𝐿 (1.3)
Where:
W = Width (in)
L = Length (ft)
b. Crusher
The ball mill crusher is as well calculated. The calculation is based on
Product and Process Design Principle by Seider. The equation is shown below.
𝐶𝑝 = 45,000 𝑊 0.69 (1.4)
Where:
W = mass flowrate (ton/hr)
c. Cyclone
Cyclone is neede to separate the syngas and impurities. The calculation is
based on Product and Process Design Principle by Seider. The equation is shown
below.
𝐶𝑝 = exp{8.9845 − 0.7892[ln(𝑆)] + 0.08487[ln(𝑆)]2 } (1.5)
Where:
S = gas flowrate (ft3-/min)
d. Pump
The calculation is based on Product and Process Design Principle by
Seider. The equation is shown below.
4
𝑆 = 𝑄 (𝐻)0.5 (1.6)
𝐶𝐵 = exp{9.2951 − 0.6019[𝑙𝑛(𝑆)] + 0.0519[𝑙𝑛(𝑆)]2 } (1.7)
𝐶𝑝 = 𝐹𝑇 𝐹𝑀 𝐶𝐵 (1.8)
Where:
Q = volume flowrate (gpm)
H = head (ft)
FM = Material (cast iron = 1)
e. Reactor and Separator
Reactor and separator both have the same equation. The calculation is
based on Product and Process Design Principle by Seider. The equation for vessel
process is shown below
𝐶𝑝 = 𝐹𝑀 𝐶𝑉 + 𝐶𝑃𝐿 (1.9)
Where:
FM = Material (cast iron = 1, stainless steel 316 = 2.1)
Cv = exp{6.775 + 0.18255[ln(𝑊)] + 0.02297[ln(𝑊)]2 }
W = weight in pounds of the shell and the two heads
CPL = added cost for platfoems and ladders (𝐶𝑃𝐿 = 285.1 (𝐷𝑖 )0.73960 (𝐿)0.70684 )
f. Tower
Tower includes distillation column, absorber and stripper. The calculation
is based on Product and Process Design Principle by Seider. The equation for
vessel process is shown below
𝐶𝑝 = 𝐹𝑀 𝐶𝑉 + 𝐶𝑃𝐿 (1.10)
Where:
FM = Material (cast iron = 1, stainless steel 316 = 2.1)
Cv = exp{7.0374 + 0.18255[ln(𝑊)] + 0.02297[ln(𝑊)]2 }
W = weight in pounds of the shell and the two heads
CPL = added cost for platfoems and ladders (𝐶𝑃𝐿 = 237.1 (𝐷𝑖 )0.63316 (𝐿)0.80161 )
g. Compressor
The calculation for compressor is as well based on Product and Process
Design Principle by Seider. The equation for tank process is shown below
𝐶𝐵 = exp{7.2223 + (0.8[𝑙𝑛(𝑃𝑐)]} (1.11)
5
𝐶𝑝 = 𝐹𝑇 𝐹𝑀 𝐶𝐵 (1.12)
Where:
PC = Power (hp)
FM = Compressor Material (SS =2.5, CS = 1.5)
FT = Compressor type
h. Heat Exchanger
The equation to calculate the cost of heat exchangers is shown below.
𝐶𝑝 = 𝐹𝑝 𝐹𝑀 𝐹𝐿 𝐶𝐵 (1.13)
Where CB calculated based on the kind of exchanger used with formula as seen
below
(1.14)
(1.15)
(1.16)
(1.17)
The table below shows the constant a and b, which is material factor for
combination of tube and shell material.
Table 1.2 FM Factor for Heat Exchanger FOB Cost
(Source: SSL, 2004)

Heat exchangers in the plant use carbon steel material. So FM can be determined
as value of 1. For FL is factor for tube length correction in Table 1.3.
6
Table 1.3 FL Factor for Heat Exchanger FOB Cost
(Source: SSL, 2004)

And the last, FP which is pressure factor base on shell side pressure and given by
this following equation:
(1.18)
For bare module price we use bare module for shell and tube exchanger which is
3.17 (SSL, 2004).
i. Storage Tank
In our plant there are 4 storage tanks. The calculation is based on Product
and Process Design Principle by Seider. The equation is shown below.
𝐶𝑝 = 37 𝑉 0.78 (1.19)
Where:
V = Volume (gal)
j. Cooling Tower, Clarifier, Sand Filter and Ion Exchanger
Vendor price is used to determine the price of cooling tower, clarifier, sand
filter and ion exchanger. Then, the price is multiplied by 2.45 (SSL, 2004) to get
the bare module cost.
k. Piping and Instrumentation
For instrumentation, the plant uses contro valve to control flow, pressure,
temperature, level and analysis. The price of each controller is known from
vendor. The cost for piping is determined by finding out the total mass of pipe
that is made of carbon steel is used, then looking at vendor’s price list to calculate
the total price of piping the plant needs
7
1.4 Total Bare Module Cost

To calculate bare modular cost, we use equation below:
𝐼
𝐶𝐵𝑀 = 𝐶𝑃 (𝐼 ) 𝐹𝐵𝑀 (1.20)
𝑏
Where,
𝐶𝐵𝑀 = Bare modular cost
𝐶𝑃 = Product cost without factored
𝐼
(𝐼 ) = Ratio of equipment cost index
𝑏
𝐹𝐵𝑀 = Bare module Factor
Table 1.4 Bare Module Factor
(Source : Seider, W. D., J. D. Seader, and D. R. Lewin,Product and Process Design Principles:
Synthesis, Analysis, and Evaluation, SecondEdition, Wiley, 2004.)
Table 1.5 shown the calculation result for each equipment in the plant
Table 1.5 Total Bare Module Cost
Equipme Original Cost

No Present Cost ($) FBM CBM ($)
nt ($)
Belt Conveyor
1 C-101 1,216,999.61 2,356,778.42 1.61 3,794,413.26
Ball Mill
2 SR-101 27,893.42 54,016.96 2.3 124,239.01
Cyclone
3 SR-101 1,640.48 3,176.87 2 6,353.74
8
Table 1.5 Total Bare Module Cost (cont’d)

nt ($)
Reactor
4 R-101 75,314.42 145,850.01 4.16 606,736.03
5 R-201 89,918.92 174,132.32 4.16 724,390.45
6 R-301 47,492.32 91,971.17 4.16 382,600.08
7 R-401 21,336.64 41,319.43 4.16 171,888.83
8 R-501 61,751.05 119,583.88 4.16 497,468.93
Separator
9 V-201 24,025.32 46,526.19 4.16 193,548.94

10 V-401 27,442.92 53,144.55 4.16 221,081.31
11 V-501 66,431.05 128,646.93 4.16 535,171.23
Distillation Column
12 C-202 169,309.55 327,876.12 4.16 1,363,964.64
13 C-601 221,055.75 428,085.11 4.16 1,780,834.08
14 C-602 278,416.17 539,166.35 4.16 2,242,932.00
Heat Exchanger
15 E-201 17,871.35 34,608.73 3.17 109,709.66
16 E-202 17,477.01 33,845.08 3.17 107,288.90
17 E-203 24,393.17 47,238.54 3.17 149,746.19
18 E-204 21,247.34 41,146.50 3.17 130,434.42
19 E-205 21,698.26 42,019.73 3.17 133,202.54
20 E-301 25,598.13 49,572.02 3.17 157,143.30
21 E-302 26,001.61 50,353.37 3.17 159,620.19
22 E-303 17,158.31 33,227.89 3.17 105,332.42
23 E-304 17,589.49 34,062.89 3.17 107,979.37
24 E-305 22,778.31 44,111.30 3.17 139,832.82
25 E-306 17,158.31 33,227.89 3.17 105,332.42
26 E-401 24,084.40 46,640.61 3.17 147,850.73
27 E-402 17,534.85 33,957.09 3.17 107,643.97
28 E-403 19,531.63 37,823.94 3.17 119,901.89
29 E-501 28,203.76 54,617.94 3.17 173,138.88
30 E-502 14,965.63 28,981.66 3.17 91,871.87
31 E-503 27,065.26 52,413.18 3.17 166,149.78
32 E-502 30,621.65 59,300.30 3.17 187,981.94
33 E-601 17,731.74 34,338.37 3.17 108,852.62
34 E-602 44,624.06 86,416.64 3.17 273,940.75
35 E-604 43,538.68 84,314.76 3.17 267,277.78
9

nt ($)
36 E-605 24,321.93 47,100.58 3.17 149,308.84
37 E-701 37,477.38 72,576.75 3.17 230,068.29
38 E-702 22,450.37 43,476.23 3.17 137,819.64
39 E-703 19,851.35 38,443.09 3.17 121,864.60
40 E-704 29,231.33 56,607.87 3.17 179,446.96
41 E-705 58,555.75 113,396.04 3.17 359,465.44
42 E-706 17,530.11 33,947.90 3.17 107,614.84
43 E-707 17,463.84 33,819.57 3.17 107,208.04
44 E-708 14,779.39 28,621.00 3.17 90,728.57
Expander
45 K-101 6,391,940.66 $12,378,301.33 3.24 $40,105,696.32
Pump
46 P-101 3,143.63 6,087.80 3.3 20,089.73
47 P-201 1,905.48 3,690.06 3.3 12,177.20
48 P-501 6,441.16 12,473.62 3.3 41,162.95
49 P-502 3,988.67 7,724.24 3.3 25,490.01
50 P-701 3,976.11 7,699.92 3.3 25,409.74
51 P-702 3,545.01 6,865.09 3.3 22,654.79
52 P-703 3,454.65 6,690.11 3.3 22,077.35
53 P-704 5,163.24 9,998.87 3.3 32,996.26
54 P-801 7,372.99 14,278.15 3.3 47,117.89
55 P-802 3,045.83 5,898.39 3.3 19,464.68
56 P-803 15,726.79 30,455.68 3.3 100,503.75
57 P-804 7,337.34 14,209.11 3.3 46,890.05
58 P-805 7,068.69 13,688.86 3.3 45,173.25
59 P-806 11,737.37 22,729.99 3.3 75,008.97
60 P-807 18,939.55 36,677.35 3.3 121,035.25
61 P-808 14,156.79 27,415.30 3.3 90,470.49
Compressor
62 JC-101 3,093,628.78 5,990,961.32 2.15 12,880,566.85
63 JC-201 17,634,616.02 34,150,284.32 2.15 73,423,111.29
64 JC-301 37,775,161.68 73,153,422.24 2.15 157,279,857.81
65 JC-401 913,808.25 1,769,633.74 2.15 3,804,712.54
66 JC-501 1,747,746.86 3,384,596.07 2.15 7,276,881.56
Absorber & Stripper
67 C-201 315,154.38 610,311.65 2.15 1,312,170.05
68 C-601 280,496.92 543,195.82 2.15 1,167,871.01
Storage Tank
10

nt ($)
69 TT-701 876,756.58 1,697,881.39 2.15 3,650,444.99
Others
Cooling
70 7,500.00 14,524.11 2.45 35,584.07
Tower
71 Clarifier 30,000.00 58,096.45 2.45 3,360,559.91
Ion
72 Exchange 232.00 449.28 2.45 1,100.73
r
Sand
73 309.00 598.39 2.45 120,511.40
Filter
74 Piping 411,339.50 445,939.24 1 445,939.24
75 Boiler 416,308.23 806,200.96 2.45 1,975,192.35
Instrumen
76 78,000.00
tation
TOTAL $324,321,467.80
So, the total cost for equipment is approximately $322,000,000

1.5 Supporting Equipment Cost
Supporting equipments include those which are needed to support the
production process, such as office stationary, office desk, chairs, cupboards, etc.
More detailed information about the supporting equipment and its cost is shown
on the table below.
Table 1.6 Supporting Equipment

Price/unit
Supporting (per Price (per
No Quantity Price (USD)
Equipment thousand thousand Rp)
Rp)
1 Computers 50 7,000 350,000 26,923.08
2 Fax 5 500 2,500 192.31
3 Desk 50 300 15,000 1,153.85
4 Chair 50 200 10,000 769.23
Air
5 7 1,000 7,000 538.46
Conditioner
6 Dispenser 5 400 2,000 153.85
7 Cupboard 20 600 12,000 923.08
11
Table 1.6 Supporting Equipment (cont’d)

Price/unit
Supporting (per Price (per
No Quantity Price (USD)
Equipment thousand thousand Rp)
Rp)
8 Locker 50 400 20,000 1,538.46
9 Sofa 15 800 12,000 923.08
10 Meeting Set 5 700 3,500 269.23
Receptionist
11 1 2,000 2,000 153.85
Set
12 White Board 5 30 150 11.54
13 Office Car 4 150,000 600,000 46,153.85
Distribution
14 5 400,000 2,000,000 153,846.15
Truck
Distribution
15 5 90,000 450,000 34,615.38
Pick Up Car
16 Television 5 1,000 5,000 384.62
Office
17 10 1,000 10,000 769.23
Equipment
$
18 Canteen Set 1 7,000 7,000
538.46
Pantry
19 4 2,500 10,000 769.23
Utensils
20 CCTV 20 1,000 20,000 1,538.46
21 Neon Lamp 1500 40 60,000 4,615.38
TOTAL Rp 3,598,150 $276,780.77
Therefore, the total cost for supporting equipment is around $277,000.

1.6 Site Preparation Cost
Site preparation cost can be divided into two parts, which are site
development cost and building cost. Site development cost is the cost we spend
for preparing the site before we build the plant, which consists of soil compacting
and asphalting; and building cost which is the cost that we spend for building the
plant.
1.6.1 Site Development Cost
From the table below, we can see our plant area based on its function, and
the cost for site developing.
12
Table 1.7 Total Area in Plant
Description Area (m2)

Equipment 80000
Facility 4000
Road + parking 20000
Conblock 16000
TOTAL 120000
Table 1.8 Site Development Cost

Type Price/m2 Total Price
Site Development $6 $756,923
Asphalt $12 $1,200,000
Conblock $7 $110,769
TOTAL $2,067,692
1.6.2 Building Cost

The building cost is calculated by measuring the area and height of each
building in our plant, which is excluding the main equipment such as reactor,
distillation column, etc. because they do not need rooms.
Table 1.9 Building Cost

Area
Height Volume Price
Facility Occupied Price ($)
(m) (m3) per m3
(m2)
Office & ADM 500 15 7500 $385 2,884,615
Canteen 72 5 360 $385 138,462
Clinic 72 3 216 $385 83,077
Mosque 72 4 288 $385 110,769
Fire Station 72 5 360 $385 138,462
Water Treatment 54 4 216 $385 83,077
13
Security Office 20 3 60 $385 23,077

Table 1.9 Building Cost (cont’d)
Area
Height Volume Price Price ($)
Facility Occupied
(m) (m3) per m3
(m2)
Warehouse 120 8 960 $385 369,231
Loading Berth 120 4 480 $385 184,615
Laboratory 100 8 800 $385 307,692

Cooling Tower,
Electricity 300 4 1200 $385 461,538
Utilities
Control Room 200 4 800 $385 307,692
Workshop 100 8 800 $385 307,692
TOTAL $5,400,000
Table 1.10 Site Preparation Cost

Site Development $6 $756,923
Asphalt $12 $1,200,000
Conblock $7 $110,769
Building cost $5,400,000
Foundation 15% building cost $810
TOTAL $7,468,502
1.7 Allocated Costs for Utility Plants and Related Facilities

To have utility section in our plants, we shall do the installment first. We also
need hydrant, telephone, and internet network installment for the office area.
Table 1.11 Costs for Utility and Related Facilities

Component Cost
Water Installment $38,462
Communication Line Installment (Telephone) $346
Hydrant Installment $3,500
Waste Treatment Installment $46,154
14
Internet Network Installment $1,154

TOTAL $89,615
1.8 Contingencies and Contractor’s Fee
Based on Product & Process Design Principles Book, contingencies’ fee
can be estimated by 15% TBM (Total Bare Module) and contractor’s fee can be
estimated by 3% TBM. TBM itself has been calculated before in the previous
section, so the value of contingencies and contractor’s fee are:
Table 1.12 Contingencies and Contractor's Fee
Type of Fee Price

Contingencies $87,286,883
Contractor $17,457,377
1.9 Land Cost

Our plant will be built in Cilegon, Banten. Hence, we check the price of
buying land per m2 in Cilegon and find that the cost is Rp3.000.000,00/m2 or
$231/m2.
Table 1.13 Land Cost

Land Area $231 $27,692,308
1.10 Royalties Cost

Royalties cost is the initial fee we have pay in the beginning of our plant
when we use a process that is covered by patents owned by another company.
Royalties cost can be estimated by 2% of TDC (Total Depreciable Cost).
Table 1.14 Royalties Cost
Type of Fee TDC Percentage Price

Royalties $694,483,590 2% $13,889,672
15
1.11 Plant Start Up Cost

The cost of plant start up can be estimated as 10% of TDC, and can be
seen in table below.
Table 1.15 Plant Start Up Cost
Type of Fee TDC Percentage Price

Start Up $694,483,590 10% $69,448,359
1.12 Working Capital

Working Capital is calculated at 17.6% TPI (total cost of equipment,
location, buildings, and facilities, and can be seen below.
Table 1.16 Working Capital Cost

Type of Fee TPI Percentage Price
Working Capital $805,513,929 17.6% $141,770,451
1.13 Calculation of Total Capital Investment

Based on Product & Process Design Principles Book, Total Capital
Investment can be calculated based on this table below.
16
Table 1.17 Components of Total Capital Investment
(Source: Sieder et al., 2003)
Table 1.18 Total Capital Investment
Kind of Cost Symbol Cost

Total equipment cost $ 324.321.468
Bulk material cost $ 498.339
Site Preparation Cost Csite $ 7.468.502,31
Service Facilities Cost Cserv $ 268.657,69
Allocated Costs for utility plants and
Calloc $ 89.615,38
related facilities
Total Direct Permanent Investment CDPI $ 332.646.582,67
Contingencies Cost Ccontingency $ 74.750,92
Contractor’s Fee Ccontractor $ 14.950,18
Total Depreciable Capital CTDC $ 332.736.283,78
Royalties Cost Croyal $ 6.654.725,68
Plant Start Up Cost Cstartup $ 33.273.628,38
Land Cost Cland $ 27.692.307,69
Total Permanent Investment CTPI $ 400.356.945,53
Working Capital CWC $ 70.462.822,41
Total Capital Investment CTCI $ 470.819.767,94
17
1.14 Comparison with Existing Plant

Based on the data obtained there are 3 IGCC plant which is already
operating in Table 1.19 to do the comparison with this IGCC plant. There are
Conoco Phillips, Shell, and China IGCC Plant.
Table 1.19 Comparison with Existing Plant

Year Revenue
Lifetime CAPEX Capacity (x1000
Plant Operati (US$x10
(years) (US$x1000) ton/day)
ng 00)
INEOS YPC  250,000 acetone
Phenol and 2013 30 500,000 800,000  400,000 phenol
Acetone  550,000 cumene
CHAPTER 2
OPERATIONAL COST
2.1 Raw Material Cost

Raw material cost is a very fundamental cost in operating a bulk chemical
plant. Raw material often takes large portion of annual operating cost in one
company. Raw material needed to convert coal to acetone is coal.
Table 2.1 Raw Material Cost

Annual Order Price per Annual
Material Supplier Location
(tonnes) Tonnes Order Cost
Bituminou PT Bukit South
5398 $57.00 $307,686.00
s Coal Asam Sumatera
The coal will be supplied from PT Bukit Asam, South Sumatera. The price of coal
is considered as FOB price from the supplier company to this company.
2.2 Solvent and Catalyst Cost
There are several reactions in this plant which need catalysts to achieve desired
products and conversion. Water Gas Shift (high temperature and low temperature)
and methanol synthesis reaction need Cu/ZnO/Al2O3 catalysts, propylene
synthesis reaction needs zeolite ZSM-5 catalyst, and acetone synthesis reaction
need V2O5/TiO2 catalyst. While MDEA solvent is used for removing dihydrogen
sulfide. MDEA and V2O5/TiO2 catalyst will have to be replaced annually, while
Cu/ZnO/Al2O3 is 6 months, and ZSM-5 is every 2 years.
Table 2.2 Solvent and Catalysts Cost
Price Shipping Total Total Annual
Solvent / Order per Annual Total Annual
Supplier per Cost per Shipping Order with
Catalyst Year (kg) Order Cost Order Cost
kg kg Cost Inventory Cost
MDEA BASF 844 $2.10 $1,772.40 $0.00 $0.00 $1,772.40 $1,949.64
Cu/ZnO/
ZhengZhou Allis 442148.39 $1.90 $840,081.94 $1.00 $442,148.39 $1,282,230.33 $1,410,453.36
Al2O3
Pingxiang Naike
Chemical
Zeolit Industry $10.0
1464 $14,640.00 $2.00 $2,928.00 $17,568.00 $19,324.80
ZSM-5 Equipment 0
Packing Co.,
Ltd.
Beihai Kaite
V2O5 /
Chemical 56.16 $5.00 $280.80 $2.00 $112.32 $393.12 $432.43
TiO2
Packing
Total $1,301,963.85 $1,432,160.24
20
2.3 Utility Cost

2.3.1 Electric Utility
We used electricity from PLN, which cost for IDR 960/kWh. This table
shows process equipment electricity and the next table shows supporting
electricity requirement.
Table 2.3 Process Equipment Electricity Cost
Usage Power Required

No Equipment Code Power (kW)
Time (h) (kWh)
Centrifugal
1 P-201 24 3.8094 91.426
pump
Centrifugal
2 P-401 24 1.9198 46.074
pump
Centrifugal
3 P-402 24 1.9236 46.166
pump
Centrifugal
4 P-403 24 3.8923 93.414
pump
Centrifugal
5 P-404 24 0.6474 15.537
pump
Centrifugal
6 P-501 24 0.8332 19.997
pump
Centrifugal
7 P-502 24 33.1800 796.320
pump
Centrifugal
8 P-601 24 0.0007 0.016
pump
Centrifugal
9 P-602 24 14.5677 349.625
pump
Centrifugal
10 P-603 24 35.5118 852.284
pump
Centrifugal
11 P-701 24 0.8742 20.981
pump
Centrifugal
12 P-702 24 0.0209 0.501
pump
Centrifugal
13 P-703 24 0.0405 0.971
pump
Centrifugal
14 P-704 24 14.6111 350.666
pump
21
Table 2.3 Process Equipment Electricity Cost (cont’d)

Time (h) (kWh)
Centrifugal
15 P-705 24 14.3991 345.577
pump
Centrifugal
16 P-706 24 4.9240 118.177
pump
17 Compressor K-201 24 2.9375 70.499
19 Compressor K-202 24 0.9617 23.081
21 Compressor K-301 24 36.0136 864.326
22 Compressor K-302 24 1.2000 28.799
23 Compressor K-401 24 5,309.0822 127,417.973
24 Compressor K-402 24 291.8955 7,005.492
25 Compressor K-501 24 1.2428 29.827
26 Compressor K-601 24 12,680.3864 304,329.273
27 Compressor K-602 24 5.9017 141.640
28 Compressor K-603 24 13,408.6382 321,807.317
29 Compressor K-604 24 36,592.3193 878,215.663
30 Compressor K-701 24 152.6722 3,664.133
31 Compressor K-702 24 1.2723 30.534

32 Mixer M-101 24 2 48.000
33 Mixer M-301 24 1.5 36.000
34 Mixer M-302 24 1 24.000
35 Mixer M-401 24 1.5 36.000
36 Mixer M-501 24 1.5 36.000
22

Time (h) (kWh)
37 Mixer M-601 24 1.7 40.800
38 Mixer M-602 24 1.2 28.800
39 Conveyor C-101 24 0.005 0.120
40 Conveyor C-102 24 0.005 0.120
41 Mill SR-101 24 2 48.000
Cooling
42 CT-100 24 872,030.400
Tower 36334.6
43 Chiller CH-100 24 21001.8 504,043.200
Total 1,646,776
Working day/year 330 days
Total electricity/year 543,436,177 kWh
Total Cost (Rp)/year Rp521,698,7

29,535

Usage Power
No Equipment Code Time Power (kW) Required
(h) (kWh)
43 Chiller CH-100 24 21001.8 504,043.200
Total 1,646,776
Total electricity/year 543,436,177 kWh
Total Cost (Rp)/year Rp521,698,729,535
Total Cost ($)/year $38,080,199.24
Table 2.5 Supporting Equipment Electricity Cost
Power/Unit Power Total Power for All Units Time Usage Total Power
Equipments Quantity
(Watt) (kW) (kW) (hours) (kwh)
Computer 50 90 0.09 4.5 24 108
Air
7 960 0.96 6.72 24 161.28
Conditioner
Dispenser 5 450 0.45 2.25 24 54
Fax Machine 5 600 0.6 3 24 72
Television 5 90 0.09 0.45 24 10.8
CCTV 20 5 0.005 0.1 24 2.4
Neon Lamp 1500 9 0.009 13.5 18 243
Total Cost per Day 651.48
Total electricity/year 214,988 kWh
Total Cost (Rp)/year Rp206,388,864
Total Cost ($)/year $15,064.88
24
2.3.2 Water Utility

In this plant, we used water from river and PDAM for plant operation and
daily employee needs. The PDAM water price for industrial is IDR 12550/m3.
Table 2.6 Water Utility Cost

Volume per day
Water Needs m3/year Total Cost
(L/day)
Plant 33134696.06 10,934,450 Rp137,227,343,733.10
Employee (180
360 119 Rp1,490,940.00
employees)
Total Price (Rp)/year Rp137,228,834,673.10
Total Price ($)/year $10,153,065.60
2.3.3 Fuel Utility

We need fuel for hot utility. The cost of fuel utility is shown below.
Table 2.7 Fuel Utility Cost
Mass Mass
Unit Flow Flow Price/kg Cost
(kg/hour) (kg/year)
Gasificatio
11.24628 3711.2724 Rp1,192.80 Rp4,426,805.72
n
Steam Rp
5041 1663530 Rp236,720,319,000.00
Generator 142,300.00
Power
- 2184000 Rp 11,000.00 Rp24,024,000,000.00
Generator
Total in IDR Rp260,748,745,805.72
Total in USD $19,291,857.49
2.4 Labor Cost
Labors working at this plant is divided into two types, direct and indirect
labor. Direct labors are in charge during direct operational process in this plant,
whereas indirect labors are in charge in monitoring plant survivability and
relationship with other stakeholders.
When considering the amount of wages for each operator, the standard
regulation should be followed. The wages for each labor should be greater than
the minimum regional wages (Upah Minimum Regional/UMR) in the plant
location, Lampung. Based on data from Kementerian Ketenegakerjaan dan
25
Transmigrasi (Kemenakertrans), there are minimum labor cost from 2015-2017.

By the estimation of UMR increase, UMR wages in 2019 is projected, the start of
estimated production. UMR in Lampung tends to increase. Due to clarity of the
calculation spreadsheet, UMR will be calculated in US$.
Table 2.8 Minimum Regional Wages Lampung

Year Salary (Rp) Salary (USD)
2015 Rp 1,581,000 $115.40
2016 Rp 1,763,000 $128.69
2017 Rp 1,908,447 $139.30
2018 Rp 2,017,341 $147.25
2019 Rp 2,089,682 $152.53
2.4.1 Direct Labor Cost

To determine the number of labors, it is necessary to see the shift
scheduling of this plant. The cost for labor-related operation covered the direct
wages and benefit (DW&B) of operators and direct salaries & benefit (DS&B) of
supervisors and engineering personnel. The DW&B and DS&B can be calculated
from an hourly rate for the labors of a proposed plant. Estimation of all labor-
related operations will include the estimation of number operators that is needed
for the plant per shift (Seider, et al., 2003). The direct operating labor
requirements will be estimated by the basis of daily plant production.
Table 2.9 Amount of Worker per Shift
Personel per Shift

Unit
Field Engineer Operator Technician
Gasification 1 2 2
AGRU 2 3 3
WGS 1 2 2
Methanol Synthesis 2 3 2
Propylene Synthesis 2 3 2
Acetone Synthesis & Purification 2 3 3
Total 10 16 14
26
Table 2.10 Salary Amount

Salary per Quantity per Total Salary
Position Shift
Month Shift Labor Amount
Field
$800.00 3 10 30 $24,000.00
Engineer
Operator $250.00 3 16 48 $12,000.00
Technician $500.00 3 14 42 $21,000.00
Analyst $400.00 1 6 6 $2,400.00
Total 126 $59,400.00
Annual Cost Total $712,800.00
2.4.2 Indirect Labor Cost

Indirect cost is needed to ensure management and operation of the firm.
The wages is used based on standard of Indonesia firm with salary projection to
2019. The indirect labor cost can be seen in table below
Table 2.11 Indirect Labor Cost

Salary/month/p Amount Total
Departemen Position
erson (US$) (person) (US$)
President
$8,000.00 1 $8,000.00
Director
Secretary of
Director President $1,000.00 1 $1,000.00
Director
Vice President
$6,000.00 1 $6,000.00
Director
Finance
Accounting $3,000.00 1 $3,000.00
Finance Manager
Departemen Assistant
Finance $1,500.00 2 $3,000.00
Manager
SCM Manager $2,500.00 1 $2,500.00
Security $160.00 10 $1,600.00
General Receptionist $160.00 3 $480.00

Support and Cleaning
Service $160.00 10 $1,600.00
Service
Departemen
Procurement &
Contract $1,000.00 2 $2,000.00
Supervisor
27
Table 2.11 Indirect Labor Cost (Cont’d)
Departemen Salary/month/p Amount

Position Total (US$)
erson (US$) (person)
HR Manager $1,500.00 1 $1,500.00
HR Planning &
HRD $800.00 1 $800.00
Recruitment
Departemen
Trainning and
$700.00 1 $700.00
Service Staff
HSE Manager $1,500.00 1 $1,500.00
HES
Departemen Safety
$800.00 2 $1,600.00
Engineer
Production and
Production Maintenance $1,500.00 1 $1,500.00
and Manager
Maintenance Process
$800.00 3 $2,400.00
Engineer
Product
Planning and
$1,500.00 1 $1,500.00
Development
Manager
Product
Planning and Product Design
$800.00 3 $2,400.00
Development Team
Department Quality Control
$800.00 3 $2,400.00
Team
Quality Control
$600.00 1 $600.00
Supervisor
Marketting
Sales and $1,500.00 1 $1,500.00
Manager
Marketting
Departemen Marketting
$800.00 3 $2,400.00
Staff
Total 54 $49,808.23
Annual Cost Total $599,760.00
2.5 Maintenance Cost

Maintenance cost is the costs incurred to keep an item in good condition
and/or good working order. When purchasing an item that requires upkeep, it
must be considered not just the initial price tag, but also the item's ongoing
maintenance cost. Maintenance cost are a major reason why home ownership can
be more expensive than renting. However, sometimes even items that are merely
28
leased, not owned, such as a leased car, will require the owner to pay maintenance
cost.
Table 2.12 Maintenance Cost
Maintenance Typical Cost Total Cost

MW&B for Solid Fluid
4.5% of TDC $ 14,816,399.26
handling process
MW&B for Solid handling $ 16,462,665.84
5% of TDC
process
MW&B for Fluid handling $ 11,523,866.09
3.5 % of TDC
process
Salaries & Benefit 25% of MWB $ 11,112,299.44
Materials and Serivce 100% of MWB $ 44,449,197.77
Maintenance Overhead 5% MW&B $ 2,222,459.89
TOTAL $ 98,446,741.72
2.6 Insurance and Tax Cost

Insurance is cost that is paid to insurance company that cooperate with this
plant. Insurance is the way to protect the company assets, both movable and fixed.
Insurance can be useful for protecting building and equipment in case of a force
majeure or other accident. For calculating the insurance, Seider’s estimate
gathered from typical cost for a chemical process plant is used.
Table 2.13 Insurance and Tax Cost
Insurance Cost Specification Cost (USD/year)

Worker Insurance 6% of Salary $78,753.60
Building and Plant Insurance 2% of TPI $16,667,220.39
TOTAL $16,745,973.99
It is also necessary to pay the tax of land, building, and salary. The amount is
shown in table below.
Table 2.14 Tax from Land and Building Cost

Cost per m2
Description Area (m2) Cost (USD)
(USD)
NJOP Earth 120,000 $25.55 $3,065,693.43
NJOP Building
500 $255.47 $127,737.23
(Office)
29
Table 2.14 Tax from Land and Building Cost (cont’d)

Cost per m2
Description Area (m2) Cost (USD)
(USD)
NJOP Building (Plant) 80,000 $204.38 $16,350,364.96
Total NJOP $19,543,795.62
NJOPTKP $875.91
NJOP for PBB $19,542,919.71
NJKP (40% NJOP) $7,817,167.88
Debted PBB (0.5% NJKP) $39,085.84
Table 2.15 Salary Tax
Salary per Net
Insurance Total Net Salary
month per Amount Bruto Positio Income Taxable
Position per Insurance Income Tax per
person (person) Income n Cost per Income
month per year per year year
(Rp) Month
President $8,480.0 $424.0 $96,672.0
$8,000.00 1 $480.00 $5,760.00 $8,056.00 $93,822.00 $4,691.10
Director 0 0 0
Secretary of
$1,060.0 $12,084.0
President $1,000.00 1 $60.00 $720.00 $53.00 $1,007.00 $9,234.00 $461.70
0 0
Director
Vice
$6,360.0 $318.0 $72,504.0
President $6,000.00 1 $360.00 $4,320.00 $6,042.00 $69,654.00 $3,482.70
0 0 0
Director
Finance
$3,180.0 $159.0 $36,252.0
Accounting $3,000.00 1 $180.00 $2,160.00 $3,021.00 $33,402.00 $1,670.10
0 0 0
Manager
Assistant
$1,590.0 $18,126.0
Finance $1,500.00 2 $90.00 $2,160.00 $79.50 $1,510.50 $15,276.00 $1,527.60
0 0
Manager
SCM $2,650.0 $132.5 $30,210.0
$2,500.00 1 $150.00 $1,800.00 $2,517.50 $27,360.00 $1,368.00
Manager 0 0 0
Security $160.00 10 $9.60 $1,152.00 $169.60 $8.48 $161.12 $1,933.44 -$916.56 -$458.28
Receptionis
$160.00 3 $9.60 $345.60 $169.60 $8.48 $161.12 $1,933.44 -$916.56 -$137.48
t
Cleaning
$160.00 10 $9.60 $1,152.00 $169.60 $8.48 $161.12 $1,933.44 -$916.56 -$458.28
Service
31
Table 2.15 Salary Tax (Cont’d)

Salary per Net
(Rp) Month
Procuremen
t& $1,060.0 $12,084.0
$1,000.00 2 $60.00 $1,440.00 $53.00 $1,007.00 $9,234.00 $923.40
Contract 0 0
Supervisor
HR $1,590.0 $18,126.0
$1,500.00 1 $90.00 $1,080.00 $79.50 $1,510.50 $15,276.00 $763.80
Manager 0 0
HR
Planning &
$800.00 1 $48.00 $576.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $340.86
Recruitmen
t
Trainning
and Service $700.00 1 $42.00 $504.00 $742.00 $37.10 $704.90 $8,458.80 $5,608.80 $280.44
Staff
HSE $1,590.0 $18,126.0
$1,500.00 1 $90.00 $1,080.00 $79.50 $1,510.50 $15,276.00 $763.80
Manager 0 0
Safety
$800.00 2 $48.00 $1,152.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $681.72
Engineer
Production
and $1,590.0 $18,126.0
$1,500.00 1 $90.00 $1,080.00 $79.50 $1,510.50 $15,276.00 $763.80
Maintenanc 0 0
e Manager
32

Salary per Net
(Rp) Month
Process
$800.00 3 $48.00 $1,728.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $1,022.58
Engineer
Product
Planning
$1,590.0 $18,126.0
and $1,500.00 1 $90.00 $1,080.00 $79.50 $1,510.50 $15,276.00 $763.80
0 0
Developme
nt Manager
Product
Design $800.00 3 $48.00 $1,728.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $1,022.58
Team
Quality
Control $800.00 3 $48.00 $1,728.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $1,022.58
Team
Quality
Control $600.00 1 $36.00 $432.00 $636.00 $31.80 $604.20 $7,250.40 $4,400.40 $220.02
Supervisor
Marketting $1,590.0 $18,126.0
$1,500.00 1 $90.00 $1,080.00 $79.50 $1,510.50 $15,276.00 $763.80
Manager 0 0
Marketting
$800.00 3 $48.00 $1,728.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20 $1,022.58
Staff
Field $17,280.0 $10,225.8
$800.00 30 $48.00 $848.00 $42.40 $805.60 $9,667.20 $6,817.20
Engineer 0 0
33

Salary per Net
(Rp) Month
Operator $250.00 48 $15.00 $8,640.00 $265.00 $13.25 $251.75 $3,021.00 $171.00 $410.40
$15,120.0
Technician $500.00 42 $30.00 $530.00 $26.50 $503.50 $6,042.00 $3,192.00 $6,703.20
0
Analyst $400.00 6 $24.00 $1,728.00 $424.00 $21.20 $402.80 $4,833.60 $1,983.60 $595.08
$78,753.6 $41,371. $2,068. $39,303.2 $471,638. $394,688.5 $40,437.4
Total $39,030.00 $180.00 $2,341.80
0 80 59 1 52 2 0
34
2.7 General Expenses

General expenses consists of communication cost and plant overhead. The
total cost spent for general expenses is $22,745,120.79. Factory overhead, also
called manufacturing overhead or work overhead, is the total cost involved in
operating all production facilities of a manufacturing business. It generally applies
to indirect labor and indirect cost, it also includes all costs involved in
manufacturing with the exception of the cost of raw materials and direct labor.
Factory overhead also includes certain costs such as quality assurance costs,
cleanup costs, etc. Calculation will be based on typical cost in chemical plant,
citing from Seider table 17.1 estimation
Table 2.16 Communication Cost
Communication Cost Price per Month Price per Year
Mail $150.00 $1,800.00

Internet & Telephone $150.00 $1,800.00
Total $300.00 $3,600.00
Table 2.17 Plant Overhead
Plant Overhead Typical Cost Total Cost

General Plant Overhead 7.1% of M&O-SW&B $7,082,910.42
Mechanical Department $2,394,223.24

2.4% of M&O-SW&B
Services
Employee Relation $5,885,798.80
5.9% of M&O-SW&B
Department
Business Services 7.4% of M&O-SW&B $7,382,188.33
TOTAL $22,745,120.79
M&O-SW&B is maintenance and operation salary, wages, and benefits. The

amount is the sum of the total annual salary and maintenance cost, which is
$99,759,301.72.
35
2.8 Other Cost

Several costs which has not covered by overhead cost will be classified as
other cost, thus far, administrative cost which includes CSR, paper works, etc. As
other cost is research and development cost in order for a search to a more
efficient and economic process for coal to acetone process.
Table 2.18 Other Cost
Cost Typical Cost Amount

Administrative 2% of Sales $4,956,117.11
Research & Development 0.5% of sales $1,239,029.28
2.9 Depreciation
Depreciation is the reduction in value of an asset. The way to depreciate an
asset is a way to account for the decreasing value of the asset to the owner and to
represent the diminishing value of capital funds invest. Salvage value is the
estimated trade-in or market value at the end of the asset’s useful life. The salvage
value, S expressed as an estimated dollar amount or as a percentage of the first
cost, may be positive, zero, or negative due to dismantling and carry-away costs.
Depreciation method will use declining balance method which use 30
years as operating time of the plant. 200% declining balance will be used and thus
create 2/N for its depreciation factor which stands at 0.067.
Table 2.19 Depreciation
Value Main Equipment Supporting Equipment Land and Building Total

Initial Value in 1st year $321,508,033.71 $276,780.77 $7,468,502.31 $329,253,316.79
D $21,433,868.91 $18,452.05 $497,900.15 $21,950,221.12
Year 1
SV $300,074,164.79 $258,328.72 $6,970,602.15
D $20,004,944.32 $17,221.91 $464,706.81 $20,486,873.04
Year 2
SV $280,069,220.47 $241,106.80 $6,505,895.34
D $18,671,281.36 $16,073.79 $433,726.36 $19,121,081.51
Year 3
SV $261,397,939.11 $225,033.02 $6,072,168.99
D $17,426,529.27 $15,002.20 $404,811.27 $17,846,342.74
Year 4
SV $243,971,409.84 $210,030.82 $5,667,357.72
D $16,264,760.66 $14,002.05 $377,823.85 $16,656,586.56
Year 5
SV $227,706,649.18 $196,028.76 $5,289,533.87
D $15,180,443.28 $13,068.58 $352,635.59 $15,546,147.45
Year 6
SV $212,526,205.90 $182,960.18 $4,936,898.28
D $14,168,413.73 $12,197.35 $329,126.55 $14,509,737.62
Year 7
SV $198,357,792.17 $170,762.83 $4,607,771.73
Table 2.19 Depreciation (cont’d)
Value Main Equipment Supporting Equipment Land and Building Total Value
D $13,223,852.81 $11,384.19 $307,184.78 $13,542,421.78
Year 8
SV $185,133,939.36 $159,378.64 $4,300,586.95
D $12,342,262.62 $10,625.24 $286,705.80 $12,639,593.66
Year 9
SV $172,791,676.74 $148,753.40 $4,013,881.15
D $11,519,445.12 $9,916.89 $267,592.08 $11,796,954.09
Year 10
SV $161,272,231.62 $138,836.51 $3,746,289.07
D $10,751,482.11 $9,255.77 $249,752.60 $11,010,490.48
Year 11
SV $150,520,749.51 $129,580.74 $3,496,536.47
D $10,034,716.63 $8,638.72 $233,102.43 $10,276,457.78
Year 12
SV $140,486,032.88 $120,942.02 $3,263,434.04
D $9,365,735.53 $8,062.80 $217,562.27 $9,591,360.60
Year 13
SV $131,120,297.36 $112,879.22 $3,045,871.77
D $8,741,353.16 $7,525.28 $203,058.12 $8,951,936.56
Year 14
SV $122,378,944.20 $105,353.94 $2,842,813.65
D $8,158,596.28 $7,023.60 $189,520.91 $8,355,140.79
Year 15
SV $114,220,347.92 $98,330.34 $2,653,292.74
D $7,614,689.86 $6,555.36 $176,886.18 $7,798,131.40
Year 16
SV $106,605,658.06 $91,774.99 $2,476,406.56
D $7,107,043.87 $6,118.33 $165,093.77 $7,278,255.97
Year 17
SV $99,498,614.19 $85,656.66 $2,311,312.79
D $6,633,240.95 $5,710.44 $154,087.52 $6,793,038.91
Year 18
SV $92,865,373.24 $79,946.21 $2,157,225.27
D $6,191,024.88 $5,329.75 $143,815.02 $6,340,169.65
Year 19
SV $86,674,348.36 $74,616.46 $2,013,410.25
D $5,778,289.89 $4,974.43 $134,227.35 $5,917,491.67
Year 20
SV $80,896,058.47 $69,642.03 $1,879,182.90
D $5,393,070.56 $4,642.80 $125,278.86 $5,522,992.23
Year 21
SV $75,502,987.90 $64,999.23 $1,753,904.04
D $5,033,532.53 $4,333.28 $116,926.94 $5,154,792.74
Year 22
SV $70,469,455.38 $60,665.95 $1,636,977.10
D $4,697,963.69 $4,044.40 $109,131.81 $4,811,139.90
Year 23
SV $65,771,491.68 $56,621.55 $1,527,845.30
D $4,384,766.11 $3,774.77 $101,856.35 $4,490,397.24
Year 24
SV $61,386,725.57 $52,846.78 $1,425,988.94
D $4,092,448.37 $3,523.12 $95,065.93 $4,191,037.42
Year 25
SV $57,294,277.20 $49,323.66 $1,330,923.01
D $3,819,618.48 $3,288.24 $88,728.20 $3,911,634.93
Year 26
SV $53,474,658.72 $46,035.42 $1,242,194.81
D $3,564,977.25 $3,069.03 $82,812.99 $3,650,859.26
Year 27
SV $49,909,681.47 $42,966.39 $1,159,381.83
D $3,327,312.10 $2,864.43 $77,292.12 $3,407,468.65
Year 28
SV $46,582,369.37 $40,101.97 $1,082,089.70
D $3,105,491.29 $2,673.46 $72,139.31 $3,180,304.07
Year 29
SV $43,476,878.08 $37,428.50 $1,009,950.39
D $2,898,458.54 $2,495.23 $67,330.03 $2,968,283.80
Year 30
SV $40,578,419.54 $34,933.27 $942,620.36 $41,555,973.18
40
2.10 Cost Breakdown of Operational Expenses

After calculating all operational expenses, the percentage of each cost can
be calculated, where maintenance cost is the biggest one.
Table 2.20 Cost Breakdown

Outcome Cost %
Raw Material $1,739,846.24 0.81%
Indirect Labor
$599,760.00 0.28%
Salary
Direct Labor Salary $712,800.00 0.33%
Utilities $68,058,796.90 31.61%
Maintenance $98,446,741.72 45.73%
Insurance and Tax $16,786,411.39 7.80%
General Expenses $22,748,720.79 10.57%
Others $6,195,146.39 2.88%
TOTAL $215,206,257.43 100.00%
Chart Title
1%
3% 0% 0%
Raw Material
10% Indirect Labor Salary
8% 32% Direct Labor Salary
Utilities
Maintenance
Insurance and Tax
46% General Expenses

Others
Figure 2.1 Cost Breakdown of Operational Expenses
CHAPTER 3
PROFITABILITY ANALYSIS
3.1 Investment Feasibility Analysis

3.1.1 Capital Loan
On the first year of cash flow, we don’t have any capital, so in order to
start the business, we need loan from institution like bank or investor. We decide
to loan from seven different banks with the minimum rate of interest. Beside
banks, we also need loan of investor with 12% of interest rate. The higher the
interest, investors will be more interested in investing, but investors are
constrained by the high interest rate bank loan. The 65% of capital comes from
bank and 35% from investors. We try to pay all the loan in 10 years. To pay the
loan, we also must pay the interest rate which each bank has its own interest rate,
and can be seen in table below.
Table 3.1 Interest Rate of Capital Source
Capital Source Interest Rate

Investor 12.00%
Bank Central Asia 5.11%
Bank CIMB Niaga 5.10%
Bank Mandiri 5.12%
Bank Negara Indonesia 5.08%
Bank Rakyat Indonesia 5.08%
ANZ Panin Bank 5.10%
Citibank 5.10%
Table 3.2 Capital Share for Each of Capital Source

Capital Source Percentage Capital Share
Investor 35% $164,786,918,78
Bank Central Asia 10% $47,081,976,79
Bank CIMB Niaga 9% $42,373,779,11
41
42
Table 3.2 Capital Share for Each of Capital Source (Cont’d)

Capital Source Percentage Capital Share
Bank Mandiri 9% $42,373,779,11
Bank Negara Indonesia 9% $42,373,779,11
Bank Rakyat Indonesia 9% $42,373,779,11
ANZ Panin Bank 9% $42,373,779,11
Citibank 10% $47,081,976,79
We try to pay all the loan in 10 years. The detail scheme of payment is shown
below.
Table 3.3 Investment Payment Scheme

Total Loan after
Year Initial Loan Loan Interest Payment
Payment Payment
0 $164,786,919 $164,786,919
1 $164,786,919 $19,774,500 $16,478,692 $36,253,192 $148,308,227
2 $148,308,227 $17,797,000 $16,478,692 $34,275,692 $131,829,535
3 $131,829,535 $15,819,600 $16,478,692 $32,298,292 $115,350,843
4 $115,350,843 $13,842,200 $16,478,692 $30,320,892 $98,872,151
5 $98,872,151 $11,864,700 $16,478,692 $28,343,392 $82,393,459
6 $82,393,459 $9,887,300 $16,478,692 $26,365,992 $65,914,768
7 $65,914,768 $7,909,800 $16,478,692 $24,388,492 $49,436,076
8 $49,436,076 $5,932,400 $16,478,692 $22,411,092 $32,957,384
9 $32,957,384 $3,954,900 $16,478,692 $20,433,592 $16,478,692
10 $16,478,692 $1,977,500 $16,478,692 $18,456,192 $0
Table 3.4 BankPayment Scheme

Total Loan after
Year Initial Loan Loan Interest Payment
Payment Payment
0 $306.032.849 $306.032.849
1 $306.032.849 $15.604.100 $30.603.285 $46.207.385 $275.429.564
2 $275.429.564 $14.043.900 $30.603.285 $44.647.185 $244.826.279
3 $244.826.279 $12.483.500 $30.603.285 $43.086.785 $214.222.994
4 $214.222.994 $10.923.200 $30.603.285 $41.526.485 $183.619.709
5 $183.619.709 $9.362.800 $30.603.285 $39.966.085 $153.016.425
6 $153.016.425 $7.802.200 $30.603.285 $38.405.485 $122.413.140
7 $122.413.140 $6.242.000 $30.603.285 $36.845.285 $91.809.855
8 $91.809.855 $4.681.500 $30.603.285 $35.284.785 $61.206.570
43
9 $61.206.570 $3.121.300 $30.603.285 $33.724.585 $30.603.285

10 $30.603.285 $1.560.800 $30.603.285 $32.164.085 $0
The financial interest that we must pay within our loan payment can be
seen in table below.
Table 3.5 Financial Interest

Year Financial Interest
1 $35.378.600
2 $31.840.900
3 $28.303.100
4 $24.765.400
5 $21.227.500
6 $17.689.500
7 $14.151.800
8 $10.613.900
9 $7.076.200
10 $3.538.300
TOTAL $194,585,200
3.1.2 Income
Our product is acetone which will be sold to other chemical plant. The
price of acetone in market is $75.42/kg. Our plant produce 4000 tons
acetone/year. Hence, the income of our plant can be seen below.
$75.42 1000 𝑘𝑔 4000 𝑡𝑜𝑛
( × × ) = $301,680,000/𝑦𝑒𝑎𝑟
𝑘𝑔 𝑡𝑜𝑛 𝑦𝑒𝑎𝑟
3.1.3 Cash Flow
Cash flow needs to be calculated to know the income earned and outcome
made during our plants lifetime. Before Tax Cash Flow (BTCF) is calculated by
adding CAPEX, OPEX and Loan Payment, while After Tax Cash Flow (ATCF) is
calculated by deducting tax from BTCF. Tax is obtained by timing taxable income
and tax rate. Taxable income can be calculated by deducting depreciation from
BTCF. Tax rate used in this calculation is 25%, based on Corporation Tax from
Indonesian Tax Pocket Book by PT PWC. The cash flow can be seen below, and
the table can be seen in Appendix.
44
200
Million Dollar
100
2031
2019
2021
2023
2025
2027
2029
2033
2035
2037
2039
2041
2043
2045
2047
2049
-100
Cash Flow
Before Tax Cash Flow

-200
After Tax Cash Flow
-300
-400
-500
-600
Year
Figure 3.1 Before and After Tax Cash Flow
2,500
Million Dollar
2,000
1,500
Cumulative Cash Flow
1,000
500
-
2027
2019
2021
2023
2025
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
(500)
(1,000)
Year
Figure 3.2 Cumulative Cash Flow
45
3.2 Profitability Analysis

3.2.1 IRR
Internal Rate of Return (IRR) is a measure of the maximum of interest rate
paid on project and still break even at the end of the project life. In other words,
the IRR is the interest rate when NPV = 0, so that the formula is:
𝑛=𝑇
𝐶𝐹𝑛
𝑁𝑃𝑉 = ∑ − 𝑇𝐶𝐼 = 0 (3.1)
(1 + 𝐼𝑅𝑅)𝑛
𝑛=1
We obtain IRR of 20.25%. Therefore, it is a feasible plan to build this

plant since the IRR is greater than WACC, which is 10.39% (calculation in
Appendix B).
3.2.2 NPV
Net Present Value (NPV) shows the net benefits received by a project over
the life of the project at a certain interest rate. NPV can also be interpreted as the
present value of the cash flows generated by the investment. In calculating the
NPV, it is necessary to determine the relevant interest rate.
A project can be counted as feasible if the NPV>0, which means the
project is profitable or provides benefits if implemented. If NPV<0, the project is
not eligible to run because it does not generate profit. Cash flow in year-n drawn
into present value with a reasonable interest rate by using the following formula:
𝐶𝐹𝑛
𝐶𝐹𝑛,0 = (3.2)
(1 + 𝑖)𝑛
We obtained NPV USD 396,867,212. Our NPV is positive and high. It means the
project can be implemented.
3.2.3 Payback Period
Payback Period is the duration (in years) of an investment will be returned.
Here is the formula for calculating payback period taking into account the Time
Value of Money:
46
𝑃𝑎𝑦𝑜𝑢𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 𝑖𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 ∶

(𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑏𝑙𝑒 𝑓𝑖𝑥𝑒𝑑 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡) +
(𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑛 𝑇𝐶𝐼 𝑑𝑢𝑟𝑖𝑛𝑔 𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑠𝑒𝑟𝑣𝑖𝑐𝑒 𝑙𝑖𝑓𝑒) (3.3)
=
𝑎𝑣𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑣𝑔 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
( + )
𝑦𝑟 𝑦𝑟 𝑎𝑠 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦
If the payback period is less than a pre-determined period, the project is

acceptable. If the payback period exceeds the predetermined period, the project is
rejected. The payback period for this plant is 7.56 years, after calculate use
Microsoft Excel.
Our payback period is matched with the rule of thumb. The rule of thumb
said that the tolerable payback period is about 10 years and should be done after
all the loan are fully paid.
3.2.4 ROR/ROI
Rate of Return (ROR) is the annual profit generated by one unit of capital
invested. The formula for calculating ROI is as follows:
𝐴𝑛𝑛𝑢𝑎𝑙 𝑁𝑃𝐴𝑇
%𝑅𝑂𝐼 = ( ) × 100% (3.4)
𝑇𝐶𝐼
Annual net profit after tax is USD 122,449,808 and the total capital
investment is USD 470,819,768. So the ROI obtained from this plant was 26%.
From the ROI calculation, we can see that our plant is attractive for investors
because it has a high rate of return.
3.2.5 Break Event Point
Breakeven point (BEP) is an analysis to determine and find the amount of
goods or services to be sold to consumers at a given price to cover the costs
incurred and the profit / profit. Calculation to find the BEP is:
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝐸𝑃 = (3.6)
(𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 − 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡)
The total fixed cost is the fixed cost values tend to be stable and not influenced by
the amount of production and the variable cost is the variable cost of the value
depends on the amount of goods produced. In this case the BEP can be previously
seen from the graph, Payback Period occurs on 7.56 years when total production
reached 30,242 tons of acetone. This analysis is almost the same with payback
period however this analysis used the number of goods or package that we sell to
47
get the profit. For simple this BEP shows that we have to produce and sell at least
30,242 tons of product to get the investor money back with interest.
CHAPTER 4
SENSITIVITY ANALYSIS
To analyze the most sensitive factor on this plant, curves that consists the
deviation between the product price, raw material cost, and labor wages can be
plotted, which those parameters affecting the value of NPV, IRR, and payback
period. Even though maintenance cost and utility cost is higher than both the raw
material and labor wages, their’s price rarely fluctuated.
Table 4.1 Product Price Deviation Effects

Change Product Price IRR PP NPV
-25% $ 56,565 7.07% 19.61 $ (119,358,117)
-20% $ 60,336 9.96% 14.99 $ (16,113,051)
-15% $ 64,107 12.66% 12.16 $ 87,132,015
-10% $ 67,878 15.25% 10.24 $ 190,377,081
-5% $ 71,649 17.77% 8.75 $ 293,622,147
0% $ 75,420 20.25% 7.56 $ 396,867,212
5% $ 79,191 22.71% 6.60 $ 500,112,278
10% $ 82,962 25.15% 5.83 $ 603,357,344
15% $ 86,733 27.58% 5.20 $ 706,602,410
20% $ 90,504 30.00% 4.67 $ 809,847,476
25% $ 94,275 32.42% 4.24 $ 913,092,541
Table 4.2 Labor Wages Deviation Effects

Change Labor Wages IRR PP NPV
-25% $984,420 20.26% 7.55 $397,514,064
-20% $1,050,048 20.26% 7.55 $397,902,174
-15% $1,115,676 20.26% 7.56 $398,135,041
-10% $1,181,304 20.26% 7.56 $398,266,999
-5% $1,246,932 20.25% 7.56 $398,326,380
0% $1,312,560 20.25% 7.56 $398,326,380
5% $1,378,188 20.25% 7.56 $398,269,968
10% $1,443,816 20.24% 7.56 $398,151,503
15% $1,509,444 20.24% 7.56 $397,956,035
20% $1,575,072 20.24% 7.56 $397,656,319
25% $1,640,700 20.23% 7.57 $397,206,744
48
49
Table 4.3 Raw Material Price Deviation Effects

Change Raw Material Price IRR PP NPV
-25% $ 1,074,120 20.31% 7.53 $ 399,317,880
-20% $ 1,145,728 20.30% 7.54 $ 398,827,746
-15% $ 1,217,336 20.28% 7.54 $ 398,337,613
-10% $ 1,288,944 20.27% 7.55 $ 397,847,479
-5% $ 1,360,552 20.26% 7.55 $ 397,357,346
0% $ 1,432,160 20.25% 7.56 $ 396,867,212
5% $ 1,503,768 20.24% 7.56 $ 396,377,079
10% $ 1,575,376 20.23% 7.57 $ 395,886,945
15% $ 1,646,984 20.21% 7.57 $ 395,396,812
20% $ 1,718,592 20.20% 7.58 $ 394,906,678
25% $ 1,790,200 20.19% 7.58 $ 394,416,545
From the table above, we classify the three parameters (product price,
labor wages, and raw material price) on specific dependent variables (IRR, net
present value, and payback period).
4.1 IRR Sensitivity Analysis
Effect of Parameter Deviation on IRR

35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
-30% -20% -10% 0% 10% 20% 30%
Product Price Labor Raw Material
Figure 4.1 Effect of Parameter Deviation on IRR
From the chart above, IRR affected greatly by acetone product price. It can
be seen that increasing product price will impact on increased change of IRR,
while labor wages and raw material price don’t affect significantly. This plant is
not attractive to the investors and bank when the IRR is lower than MARR which
is 10.39%, so the selling price cannot be decreased.
49
50
4.2 NPV Sensitivity Analysis
Effect of Parameter Deviation on NPV

$1,000,000,000.00
$800,000,000.00
$600,000,000.00
$400,000,000.00
$200,000,000.00
$-
-30% -20% -10% 0% 10% 20% 30%
$(200,000,000.00)
Figure 4.2 Effect of Parameter Deviation on NPV
From the graph above, the product price is an important factor because the
increasing value of the product price will change into a higher NPV. When the
price change 20% lower than the current price product, it will be resulted on a
negative NVP, where negative NVP is not allowed for a project (not eligible to be
implemented). In other hand, raw material cost and labor wages tend to constant.
4.3 Payback Period Sensitivity Analysis
Effect of Parameter Deviation on PP

25
20
15
10
0
-30% -20% -10% 0% 10% 20% 30%
Figure 4.3 Effect of Parameter Deviation on Payback Period
50
51
On this graph, increasing product price will decrease payback period.

Increasing raw material cost and labor wages will not affect payback period. But
that means the shorter the payback period, the investment that is put on the first
year will be return shortly.
From the three graphs, it can be concluded that the most sensitive factor is
acetone product price. The fluctuating product prices will give a massive impact
for the profitability of this plant. The most insensitive factor is labor wages and
raw material price.
51
CHAPTER 5
CONCLUSION
Based on this assignment, we can conclude several important things:

 Total capital investment in our plant is USD 470,819,767.94. It is spent for
buying equipment and land, building rooms and installing utilities, paying
contingencies, contractor, and other additional cost.
 Total cost breakdown for operational cost in our plant is USD
215,206,257.43
 Our capital loan comes from bank and investors with 10 years of time
duration paid.
 Our plant age is 30 years.
 We will sell 100% acetone product with 4,000 tonnes capacity. The price of
product is USD 75,420 per tons.
 We obtain IRR of 20.25%. It is a feasible plan to build this plant since the
IRR is greater than WACC, which is 10.39%.
 We obtained NPV USD 396,867,212. Our NPV is positive and high. It
means the project can be implemented.
 We have 7.56 years pay back period.
 Our annual net profit after tax is USD 122,429,808 and ROI of 26.01%.
 Our BEP (Break Event Point) shows we have to produce and sell at least
30,242 tons of product to get the investor money back with interest.
52
53
REFERENCES
Perry, Robert H. 1999. Perry’s Chemical Engineers’ Handbook. McGraw-Hill
Companies, Inc. 
Seider, W. D., et.al. (2003). Product and process design principles: synthesis,
analysis, and evaluation. New York: John Wiley & Sons Inc.
Staff, I. (2010, April 09). Maintenance Expenses. Retrieved November 29, 2017,
from https://www.investopedia.com/terms/m/maintenance-expenses.asp
Sinnott, R. K. 2005. Chemical Engineering Design 4th edition. Elsevier. 
53
APPENDIX
APPENDIX A: Capital Loan
Table A.1 Loan from Investor
Year Initial Loan Loan Interest Payment Total Payment Loan after Payment
0 $164,786,919 $164,786,919
1 $164,786,919 $19,774,500 $16,478,692 $36,253,192 $148,308,227
2 $148,308,227 $17,797,000 $16,478,692 $34,275,692 $131,829,535
3 $131,829,535 $15,819,600 $16,478,692 $32,298,292 $115,350,843
4 $115,350,843 $13,842,200 $16,478,692 $30,320,892 $98,872,151
5 $98,872,151 $11,864,700 $16,478,692 $28,343,392 $82,393,459
6 $82,393,459 $9,887,300 $16,478,692 $26,365,992 $65,914,768
7 $65,914,768 $7,909,800 $16,478,692 $24,388,492 $49,436,076
8 $49,436,076 $5,932,400 $16,478,692 $22,411,092 $32,957,384
9 $32,957,384 $3,954,900 $16,478,692 $20,433,592 $16,478,692
10 $16,478,692 $1,977,500 $16,478,692 $18,456,192 $0
Table A.2 Loan from Bank Central Asia
0 $47.081.977 $47,081,977
1 $47.081.977 $2.405.900 $4.708.198 $7.114.098 $42,373,779
2 $42.373.779 $2.165.400 $4.708.198 $6.873.598 $37,665,581
Table A.2 Loan from Bank Central Asia (continued)
3 $37.665.581 $1.924.800 $4.708.198 $6.632.998 $32,957,384
4 $32.957.384 $1.684.200 $4.708.198 $6.392.398 $28,249,186
5 $28.249.186 $1.443.600 $4.708.198 $6.151.798 $23,540,988
6 $23.540.988 $1.203.000 $4.708.198 $5.911.198 $18,832,791
7 $18.832.791 $962.400 $4.708.198 $5.670.598 $14,124,593
8 $14.124.593 $721.800 $4.708.198 $5.429.998 $9,416,395
9 $9.416.395 $481.200 $4.708.198 $5.189.398 $4,708,198
10 $4.708.198 $240.600 $4.708.198 $4.948.798 $0
Table A. 3 Loan from Bank CIMB Niaga
0 $42.373.779 $42.373.779
1 $42.373.779 $2.161.100 $4.237.378 $6.398.478 $38.136.401
2 $38.136.401 $1.945.000 $4.237.378 $6.182.378 $33.899.023
3 $33.899.023 $1.728.900 $4.237.378 $5.966.278 $29.661.645
4 $29.661.645 $1.512.800 $4.237.378 $5.750.178 $25.424.267
5 $25.424.267 $1.296.700 $4.237.378 $5.534.078 $21.186.890
6 $21.186.890 $1.080.600 $4.237.378 $5.317.978 $16.949.512
7 $16.949.512 $864.500 $4.237.378 $5.101.878 $12.712.134
8 $12.712.134 $648.400 $4.237.378 $4.885.778 $8.474.756
9 $8.474.756 $432.300 $4.237.378 $4.669.678 $4.237.378
10 $4.237.378 $216.200 $4.237.378 $4.453.578 $0
Table A.4 Loan from Bank Mandiri
0 $42.373.779 $42.373.779
1 $42.373.779 $2.169.600 $4.237.378 $6.406.978 $38.136.401
2 $38.136.401 $1.952.600 $4.237.378 $6.189.978 $33.899.023
3 $33.899.023 $1.735.700 $4.237.378 $5.973.078 $29.661.645
4 $29.661.645 $1.518.700 $4.237.378 $5.756.078 $25.424.267
5 $25.424.267 $1.301.800 $4.237.378 $5.539.178 $21.186.890
6 $21.186.890 $1.084.800 $4.237.378 $5.322.178 $16.949.512
7 $16.949.512 $867.900 $4.237.378 $5.105.278 $12.712.134
8 $12.712.134 $650.900 $4.237.378 $4.888.278 $8.474.756
9 $8.474.756 $434.000 $4.237.378 $4.671.378 $4.237.378
10 $4.237.378 $217.000 $4.237.378 $4.454.378 $0
Table A. 5 Loan from Bank Negara Indonesia
0 $42.373.779 $42.373.779
1 $42.373.779 $2.152.600 $4.237.378 $6.389.978 $38.136.401
2 $38.136.401 $1.937.400 $4.237.378 $6.174.778 $33.899.023
3 $33.899.023 $1.722.100 $4.237.378 $5.959.478 $29.661.645
4 $29.661.645 $1.506.900 $4.237.378 $5.744.278 $25.424.267
5 $25.424.267 $1.291.600 $4.237.378 $5.528.978 $21.186.890
6 $21.186.890 $1.076.300 $4.237.378 $5.313.678 $16.949.512
7 $16.949.512 $861.100 $4.237.378 $5.098.478 $12.712.134
Table A.5 Loan from Bank Negara Indonesia (continued)
8 $12.712.134 $645.800 $4.237.378 $4.883.178 $8.474.756
9 $8.474.756 $430.600 $4.237.378 $4.667.978 $4.237.378
10 $4.237.378 $215.300 $4.237.378 $4.452.678 $0
Table A.6 Loan from Bank Rakyat Indonesia
0 $42.373.779 $42.373.779
1 $42.373.779 $2.152.600 $4.237.378 $6.389.978 $38.136.401
2 $38.136.401 $1.937.400 $4.237.378 $6.174.778 $33.899.023
3 $33.899.023 $1.722.100 $4.237.378 $5.959.478 $29.661.645
4 $29.661.645 $1.506.900 $4.237.378 $5.744.278 $25.424.267
5 $25.424.267 $1.291.600 $4.237.378 $5.528.978 $21.186.890
6 $21.186.890 $1.076.300 $4.237.378 $5.313.678 $16.949.512
7 $16.949.512 $861.100 $4.237.378 $5.098.478 $12.712.134
8 $12.712.134 $645.800 $4.237.378 $4.883.178 $8.474.756
9 $8.474.756 $430.600 $4.237.378 $4.667.978 $4.237.378
10 $4.237.378 $215.300 $4.237.378 $4.452.678 $0
Table A.7 Loan from ANZ Panin Bank
0 $42.373.779 $42.373.779
1 $42.373.779 $2.161.100 $4.237.378 $6.398.478 $38.136.401
2 $38.136.401 $1.945.000 $4.237.378 $6.182.378 $33.899.023
3 $33.899.023 $1.728.900 $4.237.378 $5.966.278 $29.661.645
4 $29.661.645 $1.512.800 $4.237.378 $5.750.178 $25.424.267
5 $25.424.267 $1.296.700 $4.237.378 $5.534.078 $21.186.890
6 $21.186.890 $1.080.600 $4.237.378 $5.317.978 $16.949.512
7 $16.949.512 $864.500 $4.237.378 $5.101.878 $12.712.134
8 $12.712.134 $648.400 $4.237.378 $4.885.778 $8.474.756
9 $8.474.756 $432.300 $4.237.378 $4.669.678 $4.237.378
10 $4.237.378 $216.200 $4.237.378 $4.453.578 $0
Table A.8 Loan from Citibank
0 $47.081.977 $47.081.977
1 $47.081.977 $2.401.200 $4.708.198 $7.109.398 $42.373.779
2 $42.373.779 $2.161.100 $4.708.198 $6.869.298 $37.665.581
3 $37.665.581 $1.921.000 $4.708.198 $6.629.198 $32.957.384
4 $32.957.384 $1.680.900 $4.708.198 $6.389.098 $28.249.186
5 $28.249.186 $1.440.800 $4.708.198 $6.148.998 $23.540.988
6 $23.540.988 $1.200.600 $4.708.198 $5.908.798 $18.832.791
7 $18.832.791 $960.500 $4.708.198 $5.668.698 $14.124.593
Table A.8 Loan from Citibank (continued)
8 $14.124.593 $720.400 $4.708.198 $5.428.598 $9.416.395
9 $9.416.395 $480.300 $4.708.198 $5.188.498 $4.708.198
10 $4.708.198 $240.200 $4.708.198 $4.948.398 $0
Table A.9 Cash Flow

Year Volume Product Operating Maintenance Cash
Year Depreciation Revenue All Expenses
Number Sold (ton) Price Expenses Cost Expenses
0 2019
1 2020 4000 75,420 $ 81,134,007 $ 8,446,742 $ 21,950,221 $ 301,680,000 $ 179,580,748 $ 201,530,969
2 2021 4000 75,420 $ 81,134,007 $ 8,446,742 $ 20,486,873 $ 301,680,000 $ 179,580,748 $ 200,067,621
3 2022 4000 75,420 $ 81,134,007 $ 98,446,742 $ 19,121,082 $ 301,680,000 $ 179,580,748 $ 198,701,830
4 2023 4000 75,420 $ 81,134,007 $ 98,446,742 $ 17,846,343 $ 301,680,000 $ 179,580,748 $ 197,427,091
5 2024 4000 75,420 $ 81,134,007 $ 98,446,742 $ 16,656,587 $ 301,680,000 $ 179,580,748 $ 196,237,335
6 2025 4000 75,420 $ 81,134,007 $ 98,446,742 $ 15,546,147 $ 301,680,000 $ 179,580,748 $ 195,126,896
7 2026 4000 75,420 $ 81,134,007 $ 98,446,742 $ 14,509,738 $ 301,680,000 $ 179,580,748 $ 194,090,486
8 2027 4000 75,420 $ 81,134,007 $ 98,446,742 $ 13,542,422 $ 301,680,000 $ 179,580,748 $ 193,123,170
9 2028 4000 75,420 $ 81,134,007 $ 98,446,742 $ 12,639,594 $ 301,680,000 $ 179,580,748 $ 192,220,342
Table A.10 Cash Flow (continued)

10 2029 4000 75,420 $ 81,134,007 $ 98,446,742 $ 11,796,954 $ 301,680,000 $ 179,580,748 $ 191,377,702
11 2030 4000 75,420 $ 81,134,007 $ 98,446,742 $ 11,010,490 $ 301,680,000 $ 179,580,748 $ 190,591,239
12 2031 4000 75,420 $ 81,134,007 $ 98,446,742 $ 10,276,458 $ 301,680,000 $ 179,580,748 $ 189,857,206
13 2032 4000 75,420 $ 81,134,007 $ 98,446,742 $ 9,591,361 $ 301,680,000 $ 179,580,748 $ 189,172,109
14 2033 4000 75,420 $ 81,134,007 $ 98,446,742 $ 8,951,937 $ 301,680,000 $ 179,580,748 $ 188,532,685
15 2034 4000 75,420 $ 81,134,007 $ 98,446,742 $ 8,355,141 $ 301,680,000 $ 179,580,748 $ 187,935,889
16 2035 4000 75,420 $ 81,134,007 $ 98,446,742 $ 7,798,131 $ 301,680,000 $ 179,580,748 $ 187,378,880
17 2036 4000 75,420 $ 81,134,007 $ 98,446,742 $ 7,278,256 $ 301,680,000 $ 179,580,748 $ 186,859,004
18 2037 4000 75,420 $ 81,134,007 $ 98,446,742 $ 6,793,039 $ 301,680,000 $ 179,580,748 $ 186,373,787
19 2038 4000 75,420 $ 81,134,007 $ 98,446,742 $ 6,340,170 $ 301,680,000 $ 179,580,748 $ 185,920,918
20 2039 4000 75,420 $ 81,134,007 $ 98,446,742 $ 5,917,492 $ 301,680,000 $ 179,580,748 $ 185,498,240
21 2040 4000 75,420 $ 81,134,007 $ 98,446,742 $ 5,522,992 $ 301,680,000 $ 179,580,748 $ 185,103,740
22 2041 4000 75,420 $ 81,134,007 $ 98,446,742 $ 5,154,793 $ 301,680,000 $ 179,580,748 $ 184,735,541
23 2042 4000 75,420 $ 81,134,007 $ 98,446,742 $ 4,811,140 $ 301,680,000 $ 179,580,748 $ 184,391,888
24 2043 4000 75,420 $ 81,134,007 $ 98,446,742 $ 4,490,397 $ 301,680,000 $ 179,580,748 $ 184,071,145

25 2044 4000 75,420 $ 81,134,007 $ 98,446,742 $ 4,191,037 $ 301,680,000 $ 179,580,748 $ 183,771,786
26 2045 4000 75,420 $ 81,134,007 $ 98,446,742 $ 3,911,635 $ 301,680,000 $ 179,580,748 $ 183,492,383
27 2046 4000 75,420 $ 81,134,007 $ 98,446,742 $ 3,650,859 $ 301,680,000 $ 179,580,748 $ 183,231,608
28 2047 4000 75,420 $ 81,134,007 $ 98,446,742 $ 3,407,469 $ 301,680,000 $ 179,580,748 $ 182,988,217
29 2048 4000 75,420 $ 81,134,007 $ 98,446,742 $ 3,180,304 $ 301,680,000 $ 179,580,748 $ 182,761,052
30 2049 4000 75,420 $ 81,134,007 $ 98,446,742 $ 2,968,284 $ 301,680,000 $ 179,580,748 $ 182,549,032
Year Interest Cumulative Cash

Gross Profit NPBT NPAT BTCF ATCF Cash Flow
Number Payment Flow
0 $(470.819.768) $ (470.819.768) $ (470.819.768) $ (470.819.768)
1 $122.099.252 $ 100.149.031 $ 75.111.773 $ 122.099.252 $ 97.061.994 $ 97.061.994 $ 50.287.700 $ (424.045.474)
2 $122.099.252 $ 101.612.379 $ 76.209.284 $ 122.099.252 $ 96.696.157 $ 96.696.157 $ 45.259.000 $ (372.608.317)
3 $122.099.252 $ 102.978.170 $ 77.233.628 $ 122.099.252 $ 96.354.709 $ 96.354.709 $ 40.230.100 $ (316.483.708)
4 $122.099.252 $ 104.252.909 $ 78.189.682 $ 122.099.252 $ 96.036.025 $ 96.036.025 $ 35.201.600 $ (255.649.283)
5 $122.099.252 $ 105.442.665 $ 79.081.999 $ 122.099.252 $ 95.738.585 $ 95.738.585 $ 30.172.600 $ (190.083.298)
6 $122.099.252 $ 106.553.104 $ 79.914.828 $ 122.099.252 $ 95.460.976 $ 95.460.976 $ 25.144.100 $ (119.766.422)

Number Payment Flow
7 $122.099.252 $ 107.589.514 $ 80.692.136 $ 122.099.252 $ 95.201.873 $ 95.201.873 $ 20.115.200 $ (44.679.749)
8 $122.099.252 $ 108.556.830 $ 81.417.622 $ 122.099.252 $ 94.960.044 $ 94.960.044 $ 15.086.500 $ 35.193.796
9 $122.099.252 $ 109.459.658 $ 82.094.744 $ 122.099.252 $ 94.734.337 $ 94.734.337 $ 10.057.700 $ 119.870.433
10 $122.099.252 $ 110.302.298 $ 82.726.723 $ 122.099.252 $ 94.523.677 $ 94.523.677 $ 5.029.200 $ 209.364.910
11 $122.099.252 $ 111.088.761 $ 83.316.571 $ 122.099.252 $ 94.327.061 $ 94.327.061 $ - $ 303.691.972
12 $122.099.252 $ 111.822.794 $ 83.867.095 $ 122.099.252 $ 94.143.553 $ 94.143.553 $ - $ 397.835.525
13 $122.099.252 $ 112.507.891 $ 84.380.918 $ 122.099.252 $ 93.972.279 $ 93.972.279 $ - $ 491.807.804
14 $122.099.252 $ 113.147.315 $ 84.860.486 $ 122.099.252 $ 93.812.423 $ 93.812.423 $ - $ 585.620.227
15 $122.099.252 $ 113.744.111 $ 85.308.083 $ 122.099.252 $ 93.663.224 $ 93.663.224 $ - $ 679.283.451
16 $122.099.252 $ 114.301.120 $ 85.725.840 $ 122.099.252 $ 93.523.972 $ 93.523.972 $ - $ 772.807.422
17 $122.099.252 $ 114.820.996 $ 86.115.747 $ 122.099.252 $ 93.394.003 $ 93.394.003 $ - $ 866.201.425
18 $122.099.252 $ 115.306.213 $ 86.479.660 $ 122.099.252 $ 93.272.699 $ 93.272.699 $ - $ 959.474.124
19 $122.099.252 $ 115.759.082 $ 86.819.312 $ 122.099.252 $ 93.159.481 $ 93.159.481 $ - $ 1.052.633.605
20 $122.099.252 $ 116.181.760 $ 87.136.320 $ 122.099.252 $ 93.053.812 $ 93.053.812 $ - $ 1.145.687.417
21 $122.099.252 $ 116.576.260 $ 87.432.195 $ 122.099.252 $ 92.955.187 $ 92.955.187 $ - $ 1.238.642.604
22 $122.099.252 $ 116.944.459 $ 87.708.344 $ 122.099.252 $ 92.863.137 $ 92.863.137 $ - $ 1.331.505.741
23 $122.099.252 $ 117.288.112 $ 87.966.084 $ 122.099.252 $ 92.777.224 $ 92.777.224 $ - $ 1.424.282.965
24 $122.099.252 $ 117.608.855 $ 88.206.641 $ 122.099.252 $ 92.697.038 $ 92.697.038 $ - $ 1.516.980.003
Number Payment Flow
25 $122.099.252 $ 117.908.214 $ 88.431.161 $ 122.099.252 $ 92.622.198 $ 92.622.198 $ - $ 1.609.602.201
26 $122.099.252 $ 118.187.617 $ 88.640.713 $ 122.099.252 $ 92.552.348 $ 92.552.348 $ - $ 1.702.154.548
27 $122.099.252 $ 118.448.392 $ 88.836.294 $ 122.099.252 $ 92.487.154 $ 92.487.154 $ - $ 1.794.641.702
28 $122.099.252 $ 118.691.783 $ 89.018.837 $ 122.099.252 $ 92.426.306 $ 92.426.306 $ - $ 1.887.068.008
29 $122.099.252 $ 118.918.948 $ 89.189.211 $ 122.099.252 $ 92.369.515 $ 92.369.515 $ - $ 1.979.437.523
30 $122.099.252 $ 119.130.968 $ 89.348.226 $ 122.099.252 $ 92.316.510 $ 92.316.510 $ - $ 2.071.754.033
Appendix B. WACC Calculation

𝑊𝐴𝐶𝐶 = (𝑏𝑎𝑛𝑘 𝑙𝑜𝑎𝑛 𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 × 𝑏𝑎𝑛𝑘 𝑙𝑜𝑎𝑛 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 × (1 − 𝑡𝑎𝑥)) + (𝑖𝑛𝑣𝑒𝑠𝑡𝑜𝑟 𝑙𝑜𝑎𝑛 𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 × 𝑖𝑛𝑣𝑒𝑠𝑡𝑜𝑟 𝑙𝑜𝑎𝑛 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡)

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UNIVERSITAS INDONESIA

PRODUCTION OF ACETONE THROUGH COAL

CHEMICAL ENGINEERING DEPARTMENT

iii Universitas Indonesia

EXECUTIVE SUMMARY ................................................................................... ii

Figure 1.1 Chemical Engineering Plant Cost Index ................................................ 1

Table 1.1 Extrapolated Cost Index .......................................................................... 2

vii Universitas Indonesia

The Acetone plant will be built in Lampung. Calculation of capital

Figure 1.1 Chemical Engineering Plant Cost Index

Table 1.1 Extrapolated Cost Index

(Source: BPPT, 2015)

Table 1.2 FM Factor for Heat Exchanger FOB Cost

(Source: SSL, 2004)

Table 1.3 FL Factor for Heat Exchanger FOB Cost

(Source: SSL, 2004)

1.4 Total Bare Module Cost

𝐹𝐵𝑀 = Bare module Factor

Table 1.4 Bare Module Factor

Table 1.5 Total Bare Module Cost

Equipme Original Cost

Table 1.5 Total Bare Module Cost (cont’d)

9 V-201 24,025.32 46,526.19 4.16 193,548.94

Table 1.5 Total Bare Module Cost (cont’d)

Table 1.5 Total Bare Module Cost (cont’d)

So, the total cost for equipment is approximately $322,000,000

Table 1.6 Supporting Equipment

Table 1.6 Supporting Equipment (cont’d)

Therefore, the total cost for supporting equipment is around $277,000.

Table 1.7 Total Area in Plant

Description Area (m2)

Table 1.8 Site Development Cost

1.6.2 Building Cost

Table 1.9 Building Cost

Clinic 72 3 216 $385 83,077

Mosque 72 4 288 $385 110,769

Fire Station 72 5 360 $385 138,462

Water Treatment 54 4 216 $385 83,077

Security Office 20 3 60 $385 23,077

Loading Berth 120 4 480 $385 184,615

Laboratory 100 8 800 $385 307,692

Workshop 100 8 800 $385 307,692

Table 1.10 Site Preparation Cost

Type Price/m2 Total Price

1.7 Allocated Costs for Utility Plants and Related Facilities

Table 1.11 Costs for Utility and Related Facilities

Internet Network Installment $1,154

Table 1.12 Contingencies and Contractor's Fee

Type of Fee Price

1.9 Land Cost

Table 1.13 Land Cost

1.10 Royalties Cost

Table 1.14 Royalties Cost

Type of Fee TDC Percentage Price

1.11 Plant Start Up Cost

Type of Fee TDC Percentage Price

1.12 Working Capital

Table 1.16 Working Capital Cost

1.13 Calculation of Total Capital Investment

Table 1.17 Components of Total Capital Investment

(Source: Sieder et al., 2003)

Table 1.18 Total Capital Investment

Kind of Cost Symbol Cost

1.14 Comparison with Existing Plant