Chapter 3 Appendix B Development of Objective Function
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Chapter 3 Optimize L/D for a Pressure Vessel 2
erroneous assumptions (1) Chapter 3 (2) (3) dished ends (not flat) Ae = 2(1. 16 D 2) = 2. 32 D 2 thickness is a function of D (not constant) fabrication costs $ ends > $ sides (1. 5 x) 3
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Chapter 3 capacity gal 25000 pressure psi 100 250 400 1. 7 2. 4 2. 9 2. 2 2. 9 4. 3 5
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Chapter 3 Insulation example -- fixed vs. operating costs (Fi) annualization factor (repayment multiplier) for Fi = constant = F (cash flow) 22
Chapter 3 There are several disadvantages to using IRR in optimization (requires iterative solution). NPV can be shown to be equivalent to using an annualization factor (series present worth factor). - Steam Generator Example 23
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Chapter 3 Steam Generator Flow Diagram 25
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Chapter 3 In the previous section we only briefly mentioned the financial assumptions used in profitability analysis. Any detailed analysis of a project requires specifying the following parameters: (1)initial investment (2)future cash flows (3)salvage value (4)economic life (5)depreciation (6)depletion (7)investment tax credit (8)taxes (9)inflation (10)debt/equity ratio 27
REVENUE Chapter 3 SALES INCOME OPERATIONS SALVAGE VALUE MANUFACTURING (CASH OPERATING) EXPENSES OPERATING INCOME (PROFIT) DEPRECIATION NET INCOME BEFORE TAXES CASH FLOW NET INCOME AFTER TAXES FEDERAL INCOME TAXES Figure 3. 3 Computation of Cash Flow 28
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Chapter 3 A summary of the calculations is Insulation Thickness x (cm) Insulation Cost ($) Value of fuel saved ($/year) 1 2, 135 5, 281 1. 27 79 16, 013 247 2 4, 270 8, 182 1. 64 61 23, 847 191 3 6, 405 10, 020 2. 01 50 28, 028 155 4 8, 540 11, 288 2. 38 42 30, 250 130 5 10, 675 12, 215 2. 75 36 31, 301 112 6 12, 810 12, 984 3. 10 32 31, 809 98 7 14, 945 13, 480 3. 48 29 31, 378 86 Payback period (years) Return on investment (% per year) Net Present value ($) Internal rate of return (%) 37
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