ECONOMIC ANALYSIS

INTRODUCTION

Manufacturing Plants are designed that would require a high amount of Investment to build

and to operate. The investment of the manufacturing plant should be estimated to be able to project

the profitability, breaking point, and return of investment. This chapter includes the economic

viability of manufacturing plant to be able to optimize the manufacturing design and the design

process. A preliminary assessment of the manufacturing plant was made in the chapter two of this

paper, as well as the market projection of the product and raw materials required. Class 3 and 4

estimates were conducted for the preliminary assessment. Class 3 and 4 estimates have an

inaccuracy range of 30% - 40% and the project definition is limited from 2% - 4%. The class

estimates were determined from the book Chemical Engineering Design by Towler. It was

determined that the return of investment for the manufacturing plant was 4 years.

This chapter will be providing a more accurate estimation of the investment since class 1

and 2 estimates will be provided for the equipment and prices of the raw materials and the products.

The fixed capital investment is the sum of cost of designing and constructing the plant, which

includes the outside battery limits (OSBL) and inside battery limits(ISBL) investments,

construction and engineering cost, and contingency charges, variable and fixed cost for the

production. The revenue of the manufacturing plant will be based on the production of raw

materials and as well as the savings from the recycling of waste and cooling water in order to

minimize the cost in the design process. After this chapter the economic viability of the Methyl

Isobutyl Ketone manufacturing plant will be determined. The Table 7.1 will include the

summarization of the ISBL, OSBL, engineering cost, and contingency charges. Table 7.2 will

include the Project cost (Variable and Fixed Cost of production) and the revenue.
Table 7
Fixed Capital Cost
FIXED CAPITAL INVESTMENT

Engineering Cost  Management of project cost

 Construction supervision and services

 Administrative Charges

Inside Battery Direct Cost  Road Construction, Sewerage, and

Limits Investment foundation

(ISBL)  Manufacturing Equipment: Reactor,

Distillation Column, Heat Exchangers,

Vessels, Tanks, Pumps, and Compressors

Indirect Cost  Installation Labor and Supervision

 Labor Benefits and Hazard Pay

 Construction Cost and Insurance

 Permits and Taxes

Outside Battery Limits Investment (OSBL)  Medical and Fire Facilities

 Laboratories for product analysis

 Wastewater Treatment Plant

 Cooling Towers

 Reboilers

 Administration Offices, Canteens, and

Control Rooms

Contingency Charges  Currency Fluctuations

 Price inflations
Table 7
Cost and Revenues
COSTS AND REVENUES

Fixed Cost Production  Supervision

 Labor

 Maintenance

 Property Taxes

 Rent of Land

 Sales and Marketing Cost

Variable Cost Production  Raw Materials

 Utilities such as cooling waters,

electricity, fuel, and steam

 Wastewater Treatment

 Packaging and Shipment

Revenue  Sales from Products

The plant will be operating for 8000 hours according to Towler & Sinnott (2013). This

would imply that the manufacturing plant will be operating for 334 days every year. Employees

will be given 15 days for sick leave and 15 days for vacation leave since it is mandated by the law.

Special non-working holidays such as Chinese New Year, Christmas Eve, and New Year be allotted

for plant maintenance. For other holidays without plant maintenance will still operate, given that

the employees will be provided a double pay.

Fixed Capital Investment

7.1 ISBL Capital Cost

Price Quotations of equipment, raw materials, and products will be coming from

the different vendors. This could mean that the quotations would fall into the class 1

estimate. The vendors were e-mailed directly providing the specification sheets and system

drawing. The price quotations will be used as the basis since it will be purchased the same

year while the purchasing cost will be adjusted in order to account for the indirect costs

such as installation, construction, and labor.

The method used for the cost calculation is the factorial method. Installation factors

also contributes to the total capital costs and is calculated by multiplying the total

purchased equipment costs by an appropriate factor. Since price quotations were provided

by the vendors, this method will fall into the class 3 estimate of the capital cost of the

manufacturing plant.

Ce = cost of equipment

M = total number of equipment

Table 7
Typical Factors for estimation of project fixed cost
Item Factor

Equipment Erection (𝑓𝑒𝑟) 0.3

Piping (𝑓𝑝) 0.8

Instrumentation and Control (𝑓𝑖) 0.3

Electrical (𝑓𝑒𝑙) 0.2

Civil (𝑓𝑐) 0.3

Structures and Buildings (𝑓𝑠) 0.2

Lagging and Paint (𝑓𝑙) 0.1

Material factor (𝑓𝑚) 1.3 (SS), 1.0 (CS)

Another cost that must be accounted is the freight costs, incurred from the transport

of shipments from port-to-port. This will be obtained using a freight rate calculator

available online at worldfreightrates.com. Lastly, duties and taxes imposed by the Bureau

of Customs, is the sum of the value added tax, import processing fee, and excise tax. The

rate of duty for steel to be used for industrial machinery and equipment, as per classification

of goods under AHTN, Section 104 of the Tariff and Customs Code of the Philippines

(TCCP), is 1% of the dutifiable or CIF value. The value added tax is calculated as 12% of

the Total Landed Cost or the sum of CIF value and Customs duty.
7.1.1Total Cost for Heat exchangers

The purchasing Cost of the Heat Exchangers were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the heat exchangers

are carbon steel and stainless steel. Table 7.4 shows the summation cost, and the adjusted

cost.

Table 7
Heat Exchangers purchasing cost
Equipment Area (m2) Price (PhP)

E-100` 18.7
207,376.00
E-102 480.1
5,532,644.00
E-103 355.5
3,564,028.00
E-200 213.7
2,686,320.00
E-201 195.3
2,531,048.00
E-202 169.6
2,334,072.00
E-203 427.6
4,785,092.00
E-300 4.5
100,360.00
E-301 6.4
115,284.00
E-302 3.4
91,156.00
Final Purchasing Cost
23,044,751.60
Cost with Installation Factor
73,743,205.12
Freight Cost
66,872.00
Total Cost
73,810,077.12
7.1.2 Total Cost for the Reboilers

The purchasing Cost of the reboilers were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the reboilers is carbon

steel and stainless steel. Table 7.5 shows the summation cost, and the adjusted cost.

Table 7
Reboilers purchasing cost
Equipment Area (m2) Price (PhP)

T-300 101.5
1,760,512.00
T-301 40.4
979,784.00
T-302 65.8
1,317,316.00
T-303 2.9
378,976.00
Final Purchasing Cost
4,658,417.40
Cost with Installation Factor
14,906,935.68
Freight Cost
66,872.00
Total Cost
14,973,807.68
7.1.3 Total Cost for the Condensers

The purchasing Cost of the Condensers were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the Condensers is

carbon steel and stainless steel. Table 7.5 shows the summation cost, and the adjusted cost.

Table 7
Condensers purchasing cost
Equipment Area (m2) Price (PhP)

T-300 7.5
559,780.00
T-301 3.1
401,960.00
T-302 3.6
495,612.00
T-303 2.2
67,600.00
Final Purchasing Cost
1,601,199.60
Cost with Installation Factor
5,123,838.72
Freight Cost
66,872.00
Total Cost
5,190,710.72
7.1.4 Total Cost for the Distillation Column

The purchasing Cost of the distillation column were obtained from the vendor,

Wuxi Nanquan Pharmaceutical Chemical Container Factory. The material used for the

construction of the distillation column is carbon steel and stainless steel. Table 6.5 shows

the summation cost, and the adjusted cost.

Table 7
Distillation column purchasing cost
Equipment Sieve Trays Price ($)

DC-1 36
11,840,400.00
DC-2 29
959,920.00
DC-3 27
904,280.00
DC-4 10
317,200.00
Final Purchasing Cost
14,021,800.00
Cost with Installation Factor
44,869,760.00
Freight Cost
66,872.00
Total Cost
44,936,632.00
7.1.5 Total Cost for the Compressors

The purchasing Cost of the compressors were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the compressors is

carbon steel and stainless steel. Table 6.5 shows the summation cost, and the adjusted cost.

Table 7
compressors purchasing cost
Equipment Power (kW) Price ($)

K-100 37739.02
81,865,992.00
K-U100 682.82
7,253,480.00
Final Purchasing Cost 1,713,836

Cost with Installation Factor

285,182,310.40
Freight Cost
66,872.00
Total Cost
285,249,182.40
7.1.6 Total Cost for the Pumps

The purchasing Cost of the pumps were obtained from Shanghai Kaiyuan Pump

Industry. The material used for the construction of the pumps is carbon steel and stainless

steel. Table 6.5 shows the summation cost, and the adjusted cost.

Table 7
Pumps purchasing cost
Equipment Power (hp) Price ($)

P-100 1
33,800.00
P-300 5
160,160.00
P-U100 3
121,680.00
P-U101 3
121,680.00
P-U200 3
121,680.00
P-U201 3
121,680.00
P-U300 7
183,560.00
PU-301 7
183,560.00
P-U302 7
183,560.00
P-U303 10
221,260.00
P-U400 7
183,560.00
P-U401 7
183,560.00
P-U402 7
183,560.00
P-U403 10
221,260.00
Final Purchasing Cost
2,224,560.00
Cost with Installation Factor
7,118,592.00
Freight Cost
66,872.00
 Total Cost
7,185,464.00

7.1.7 Total Cost for the Storage Tanks

The purchasing Cost of the storage tanks were obtained Taishan Group Taian Boao

International Trading Co., Ltd. The material used for the construction of the storage tanks

is carbon steel. Table 6.5 shows the summation cost, and the adjusted cost.

Table 7
Storage Tanks purchasing cost
Equipment Quantity Volume (m3) Price per unit Price (PhP)

(PhP/ unit)

AST (Acetone 30 202.03

Storage Tank)
2,886,000.00 86,580,000.00
DST (Diisobutyl 6 165.44

Ketone Storage

Tank)
3,046,680.00 18,280,080.00
MST1 (Methyl 6 189.28

Isobutyl Ketone

Storage Tank 1)
3,182,400.00 19,094,400.00
MST1 (Methyl 14 168.97

Isobutyl Ketone

Storage Tank 2)
3,614,000.00 50,596,000.00
Final Purchasing Cost
174,550,480.00
Cost with Installation Factor
558,561,536.00
Freight Cost
66,872.00
 Total Cost
558,628,408.00

7.1.8 Total Cost for the Reactor

The purchasing Cost of the reactor were obtained from a quotation of a company

named Qingdao ShinDah Machinery Co., Ltd. The material of of construction is staineless

steel for the reactor. The purchasing price is listed in the table below:

Table 7
Reactor purchasing cost
Equipment Volume (m3) Price ($)

CRV-101
3,785,600.00
Final Purchasing Cost
3,785,600.00
Cost with Installation Factor
12,113,920.00
Freight Cost
66,872.00
Total Cost 12,180,792.00

7.1.9 Total Cost for the Separator

The purchasing Cost of the reactor were obtained from a quotation of a company

named Shreewire Process Technology Private Limited. The material of of construction is

stainless steel for the reactor. The purchasing price is listed in the table below:
Table 7
Separator purchasing cost
Equipment Volume (m3) Price ($)

V-300
1,690,000.00
Final Purchasing Cost
1,690,000.00
Cost with Installation Factor
5,408,000.00
Freight Cost
66,872.00
Total Cost
5,474,872.00

7.1.10 Total Cost for the Decanter

The purchasing Cost of the reactor were obtained from a quotation of a company

named PuyangZhongshi Group Co., Ltd.. The material of of construction is carbon steel

for the reactor. The purchasing price is listed in the table below:

Table 7
Decanter purchasing cost
Equipment Volume (m3) Price ($)

V-301
468,000.00
Final Purchasing Cost
468,000.00
Cost with Installation Factor
1,497,600.00
Freight Cost
66,872.00
Total Cost
1,564,472.00
7. 1.11 Total Cost for the Pipe

The purchasing Cost of the pipes were obtained from Torrent Engineering &

Equipment Inc. The following table contains the cost per length of specific pipe size.
Length (m) Material Material Stress (psig)
Stream Schedule Number Nominal pipe size fluid type Diameter(in) Diameter (m) Cost per length Cost ($)
288.81 CS 12885.3 AcetonefromSTR 40 2L 2.2 0.1 4.1 1184.121
6.22 CS 12885.3 S1-A 40 2L 2.2 0.1 4.1 25.502
12.84 CS 12885.3 S2-A 40 4G 4.3 0.1 8.4 107.856
17.28 CS 12885.3 S3-A 40 4G 4.3 0.1 8.4 145.152
65.15 AA 8585.3 S2-H 40 16 G 15.5 0.4 44.2 2879.63
37.39 AA 8585.3 S3 40 18 G 17.5 0.4 60.1 2247.139
10.9 SS 19985.3 S4 40 20 G 19.5 0.5 62.1 676.89
15.75 SS 19985.3 S5 40 20 G 19.5 0.5 62.1 978.075
25.43 SS 19985.3 S6 40 18 G 16.9 0.4 60.1 1528.343
26.13 SS 19985.3 S7 40 18 G 16.9 0.4 60.1 1570.413
15.47 SS 19985.3 S8 40 18 G 16.9 0.4 60.1 929.747
6.16 SS 19985.3 S9 40 18 G 16.9 0.4 60.1 370.216
75.19 SS 19985.3 RS1 40 16 G 15.5 0.4 44.2 3323.398
55.61 CS 12885.3 RS2 40 2G 2.2 0.1 4.1 228.001

3.42 SS 19985.3 S10 40 18 G 16.9 0.4 60.1 205.542

3.41 SS 19985.3 S11 40 16 G 15.5 0.4 44.5 151.745

3.49 SS 19985.3 S12 40 16 G 15.5 0.4 44.5 155.305

6.18 SS 19985.3 S13 40 16 G 15.5 0.4 44.5 275.01

6.25 SS 19985.3 S14 40 18 G 17.5 0.4 59.8 373.75

3.73 CS 12885.3 S15 40 2L 2.2 0.1 4.1 15.293
3.75 CS 12885.3 S16 40 2L 2.2 0.1 4.1 15.375
134.81 CS 12885.3 S17 40 1L 1.1 0.0 2.1 283.101
3.51 CS 12885.3 S18 40 1.5 L 1.7 0.0 2.6 9.126
Length (m) Material Material Stress (psig)
Stream Schedule Number Nominal pipe size fluid type Diameter(in) Diameter (m) Cost per length Cost ($)
7.54 CS 12885.3 S19 40 2L 2.1 0.1 4.1 30.914
15.13 CS 12885.3 S20 40 1L 1.1 0.0 2.1 31.773
2.44 CS 12885.3 S21 40 2G 2.2 0.1 4.1 10.004
26.65 CS 12885.3 S22 40 1.5 L 1.6 0.0 2.6 69.29
16.69 CS 12885.3 S23 40 1.25 L 1.4 0.0 2.4 40.056
17.48 CS 12885.3 S24 40 1L 1.1 0.0 2.1 36.708
14.88 CS 12885.3 S25 40 1.25 L 1.4 0.0 2.4 35.712
0.66 CS 12885.3 S26 40 3G 3.1 0.1 6.2 4.092
16.84 CS 12885.3 S27 40 1L 1.1 0.0 2.1 35.364
21.53 CS 12885.3 S29 40 1L 1.1 0.0 2.1 45.213
12.77 CS 12885.3 S30 40 1L 1.1 0.0 2.1 26.817

23.64 CS 12885.3 S33 40 1.5 G 1.7 0.0 3.8 89.832

238.96 CS 12885.3 DIBKTOSTR 40 1L 1.1 0.0 2.1 501.816

212.84 CS 12885.3 MIBKSTR1 40 1.25 L 1.4 0.0 2.4 510.816
224.64 CS 12885.3 MIBKSTR2 40 1L 1.1 0.0 2.1 471.744
0.62 SS 19985.3 S32 40 2G 2.2 0.1 4.1 2.542
0.62 CS 12855.3 S31 40 2G 2.2 0.1 4.1 2.542
Length (m) Material Material Stress (psig)
Stream Schedule Number Nominal pipe size fluid type Diameter(in) Diameter (m) Cost per length Cost ($)
100 CS 12855.3 STEAM F1 inlet 40 6G 6.1 0.2 12.8 1280
100 CS 12855.3 STEAM F1 outlet 40 6G 6.1 0.2 12.8 1280
100 CS 12855.3 STEAM F2 outlet 40 6G 6.1 0.2 12.8 1280
150 CS 12855.3 S2-COLD1 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-HOT1 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-COLD2 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-HOT2 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-COLD3 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-HOT3 40 8L 8.0 0.2 16.8 2520
150 CS 12855.3 S2-COLD4 40 10 L 10.0 0.3 23.9 3585
150 CS 12855.3 S2-HOT4 40 10 L 10.0 0.3 23.9 3585
150 CS 12855.3 S3-COLD1 40 1.5 L 1.6 0.0 4.1 615
150 CS 12855.3 S3-HOT1 40 1.5 L 1.6 0.0 4.1 615
150 CS 12855.3 S3-COLD2 40 2L 2.1 0.1 4.3 645
150 CS 12855.3 S3-HOT2 40 2L 2.1 0.1 4.3 645
150 CS 12855.3 S3-COLD3 40 1.5 L 1.6 0.0 4.1 615
150 CS 12855.3 S3-HOT3 40 1.5 L 1.6 0.0 4.1 615
150 CS 12855.3 SEC3COLDWATER-0 40 3 1/3 L 3.5 0.1 6.8 1020
150 CS 12855.3 SEC3COLDWATER-1 40 2L 2.1 0.1 4.3 645
150 CS 12855.3 SEC3COLDWATER-2 40 3L 3.1 0.1 6.5 975
150 CS 12855.3 SEC3COLDWATER-3 40 1.25 L 1.4 0.0 2.5 375
100 CS 12855.3 SEC3HOTWATER-0 40 3 1/3 L 3.5 0.1 6.8 680
100 CS 12855.3 SEC3HOTWATER-1 40 2L 2.1 0.1 4.3 430
100 CS 12855.3 SEC3HOTWATER-2 40 3L 3.1 0.1 6.5 650
100 CS 12855.3 SEC3HOTWATER-3 40 1.25 L 1.4 0.0 2.5 250
Length (m) Material Material Stress (psig)
Stream Schedule Number Nominal pipe size fluid type Diameter(in) Diameter (m) Cost per length Cost ($)
150 CS 12855.3 T-300C-INLET 40 4G 4.0 0.1 8.6 1290
150 CS 12855.3 T-300C-OUTLET 40 2.5 L 2.5 0.1 3.8 570
150 CS 12855.3 T-301C-INLET 40 3G 3.1 0.1 6.5 975
150 CS 12855.3 T-301C-OUTLET 40 2.5 L 2.5 0.1 3.8 570
150 CS 12855.3 T-302C-INLET 40 5G 5.0 0.1 11.3 1695
150 CS 12855.3 T-302C-OUTLET 40 2.5 L 2.5 0.1 3.8 570
150 CS 12855.3 T-303C-INLET 40 1.5 G 1.6 0.0 4.1 615
150 CS 12855.3 T-303C-OUTLET 40 1L 1.0 0.0 2.15 322.5
100 CS 12855.3 STEAM0-INLET 40 8G 8.0 0.2 16.8 1680
100 CS 12855.3 STEAM0-OUTLET 40 8G 8.0 0.2 16.8 1680
100 CS 12855.3 STEAM1-INLET 40 5G 5.0 0.1 11.3 1130
100 CS 12855.3 STEAM1-OUTLET 40 4G 4.0 0.1 8.6 860
100 CS 12855.3 STEAM2-INLET 40 6G 6.1 0.2 12.8 1280
100 CS 12855.3 STEAM2-OUTLET 40 5G 5.0 0.1 11.3 1130
100 CS 12855.3 STEAM3-INLET 40 3G 3.1 0.1 6.5 650
100 CS 12855.3 STEAM3-OUTLET 40 2G 2.5 0.1 4.3 430
100 CS 12855.3 T-300R-INLET 40 4L 4.0 0.1 8.6 860
100 CS 12855.3 T-300R-OUTLET 40 8G 8.0 0.2 16.8 1680
100 CS 12855.3 T-301R-INLET 40 2.5 L 2.5 0.1 3.8 380
100 CS 12855.3 T-301R-OUTLET 40 4G 4.0 0.1 8.6 860
100 CS 12855.3 T-302R-INLET 40 2.5 L 2.5 0.1 3.8 380
100 CS 12855.3 T-302R-OUTLET 40 5G 5.0 0.1 11.3 1130
100 CS 12855.3 T-303R-INLET 40 2L 2.1 0.1 4.3 430
100 CS 12855.3 T-303R-OUTLET 40 3G 3.1 0.1 6.5 650
Total Cost 76346.465
Table 7
Pipe cost
Final Purchasing Cost
3,970,016.44
Cost with Installation Factor
12,704,052.40
Freight Cost
66,872.00
Total Cost
12,770,924.40

Summary for the ISBL:

Table 7
ISBL Capital Cost
Heat exchangers 73,810,077.12

Reboilers 287,957.84

Condensers 5,190,710.72

Distillation Column 44,936,632.00

Compressors 285,249,182.40

Pumps 7,185,464.00

Storage Tanks 558,628,408.00

Reactor 12,180,792.00

Separator 5,474,872.00

Decanter 1,564,472.00

Pipes 12,770,924.40

ISBL Capital Cost

1,021,965,342.32
OSBL Capital Cost

7.2.1 Total Cost for Cooling Tower

The purchasing Cost of the cooling tower were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the cooling tower is

carbon steel. Table 7.9 shows the summation cost, and the adjusted cost.

Table 7
Cooling Tower purchasing cost
Equipment Capacity (m3/hr) Price (PhP)

E-107 97.05 18,434,000.00

Final Purchasing Cost

18,434,000.00
Cost with Installation Factor
58,988,800.00
Freight Cost
66,872.00
Total Cost
59,055,672.00
7.2.2 Total Cost for Fired Heater

The purchasing Cost of the fired heater were obtained via Aspen HYSIS V8.8

Exchanger Design ratings. The material used for the construction of the fired heater is

carbon steel. Table 7.9 shows the summation cost, and the adjusted cost.

Table 7
Fired heater purchasing cost
Equipment Capacity (m3/hr) Price (PhP)

FH-100 14,734.10 31,070,000.00

Final Purchasing Cost

31,070,000.00
Cost with Installation Factor
99,424,000.00
Freight Cost
66,872.00
Total Cost
99,490,872.00

7.2.3 Total Cost of Wastewater treatment plant

The purchasing costs of the waterwater treatment plant is obtained from an

estimation provided by Dr. Nolan Tolosa, where the amount of flow is used as a basis

for the cost estimation. He specified that for a daily cubic meter of flow, the cost is $

477.92.

Table 7

Wastewater treatment plant purchasing cost

Equipment Capacity (m3/day) Price (PhP)

WWTP-100 367.2 9,125,595.44

Final Purchasing Cost

9,125,595.44
 Cost with Installation Factor
29,201,906.24
Freight Cost
66,872.00
Total Cost
29,268,778.24

7.2.4 Total cost for buildings and constructions

The materials for the construction of buildings, parking lots, and roads should also

be accounted. The different data gathered came from the Philippine Statistics Authority

and for the costing of the parking lots will be based on the E.P. Malto Asphalt Construction.

Table 7
Cost of Buildings per sq. m.
Type of Buildings Cost Per Square Meter (PhP/m2)

Office building 15,262.52

Small service building 4,131.92

Industrial building 8,881.08

Warehouse building 4,131.92

Medium service building 7,764.12

Table 7
Cost of Asphalt
Materials used for Parking Lots Cost (PhP) Per Square Meter

Asphalt 182
Table 7
Total Cost of Buildings
Facility Area (m2) Cost (PhP)

Administration 2500
38,156,300.00
Security 1 (Main) 240.3829
993,242.92
Security 2 252.0495
1,041,448.37
Wastewater Treatment Plant 600
5,328,648.00
Fire Station 562.4623
2,324,049.23
Delivery House 1 939.7878
718,110.65
Delivery House 2 939.7878
718,110.65
Warehouse 1404.211
5,802,087.52
Canteen 525.78
4,082,219.01
Clinic 75
582,309.00
Boiler House 375
2,911,545.00
Parking Lot 2400
436,800.00
Total 10814.46

63,094,870.35

7.2.5 Total Cost for Perimeter Wall

The Safety of the Manufacturing plant is one of the top priority. A wall shall be

constructed in order to avoid outsiders to trespass in the manufacturing plant and for the

safety of the employees and the products.

Table 7
Perimeter wall of the Manufacturing Plant
Unit Cost Quantity Line Cost (PhP)

Block 185.64 per square 24,009.6 square

wall: concrete blocks foot 4,457,142.04
are assembled into a feet
wall with mortar,
reinforcing steel, and
2" thick cap;
including waste and
misc. material.
Footing with #4 185.64 per square 4,001.6 ft
reinforcing bar steel foot 759,460.00
including waste and
misc. material.
Equipment: footing 185.64 per square 4,001.6 ft
trencher and power foot 199,760.08
cement mixer;
including transport
and fuel.
Labor 185.64 per square 3,221 hours
foot 5,694,728.00
Total
11,111,090.12

7.2.5 Total costs of transportation trucks

The transportation of the products will be carried by 12 ISUZU NHR Cab Chassis 71.

Table 7

Transportation Trucks

Cost Quantity Total Cost (PhP)

ISUZU NHR Cab Chassis 1,189,240.00 12

71
14,270,880.00
ISO tank (20 MT) 468,000.00 12
5,616,000.00
Total Cost
19,886,880.00
 Table 7
OSBL capital cost summary
Facility/Equipment Cost

Cooling Tower 59,055,672.00

Fired Heater 99,490,872.00

Wastewater treatment Plant 29,268,778.24

Facilities 63,094,870.35

Perimeter Wall 11,111,090.12

Transportation Trucks 19,886,880.00

Total Cost 281,908,162.71

Engineering costs

Engineering costs, also called home office charges or contractor charges, include the fees

of distinct design and different engineering services mandatory for a project. According to Towler

& Sinnott (2013), as a general rule of thumb, the engineering costs is 30% of ISBL plus OSBL

cost for smaller projects and 10% of ISBL plus OSBL cost for larger projects. This will be used

for the estimation of the total engineering costs for the plant.

Engineering cost = (0.10) (ISBL + OSBL)

Engineering costs = (0.10) (1,021,965,342.32+ 281,908,162.71)

Engineering costs = ₱ 130,387,350.50

Contingency charges

As defined by Towler & Sinnott (2013), contingency charges are supplementary fee

charged by the Engineering, Procurement and Construction company to allow variation from the

cost estimate. It is also identified that a minimum contingency charge of 10% of ISBL plus OSBL

cost should be used on all projects. This will be used as an estimate for the contingency costs

attributed to the plant.

Contingency charges = (0.10) (ISBL + OSBL)

Contingency charges = (0.10) (1,021,965,342.32+ 281,908,162.71)

Contingency charges = ₱ 130,387,350.50

Working Capital

Together with the fixed capital investments, the company needs to invest some capital for

daily plant operations. According to Towler & Sinnott (2013), a typical figure for petrochemical

plants is 15% of the fixed capital.

Working Capital = (0.15) (ISBL + OSBL)

Working Capital = (0.15) (1,021,965,342.32+ 281,908,162.71)

Working Capital = ₱ 195,581,025.75

Production costs and revenues

The plant’s production will be consisting of the variable costs of the production and the

fixed costs of production. The variable costs of production include the raw materials consumed

in the process, utilities to support process, consumables and effluent disposal. On the other hand,

the fixed costs of production, includes the operating labor, supervision, wages, maintenance and

others. In addition, the revenues derived from the plant’s major products will be accounted in

this section.

7.6.1 Raw material costs

The Raw materials needed in the Manufacturing plant are the Acetone and

Hydrogen. The Acetone will be coming from the A.P.C Chemicals and the hydrogen will

be provided by Linde on-site. The price of the Acetone is provided by the Table 7.15. since

the hydrogen will be provided by Linde on-site, the price will also include the equipment.

The inflation rate of Acetone and hydrogen according to the Philippine Statistics Authority

is 3.0%

Table 7
Acetone Price
Raw Material Flowrate Price (PhP) Cost per year (PhP)

Acetone 48,000 32,136 1,542,528,000.00

Table 7
Acetone Cost 20 years
Year Turndown Capacity MTPY Price per MT Cost (PhP)

2021 50
24,000.00 32,136.00 771,264,000.00
2022 100
48,000.00 33,100.08 1,588,803,840.00
 2023 100
48,000.00 34,093.08 1,636,467,955.20
2024 100
48,000.00 35,115.87 1,685,561,993.86
2025 100
48,000.00 36,169.35 1,736,128,853.67
2026 100
48,000.00 37,254.43 1,788,212,719.28
2027 100
48,000.00 38,372.06 1,841,859,100.86
2028 100
48,000.00 39,523.23 1,897,114,873.89
2029 100
48,000.00 40,708.92 1,954,028,320.10
2030 100
48,000.00 41,930.19 2,012,649,169.71
2031 100
48,000.00 43,188.10 2,073,028,644.80
2032 100
48,000.00 44,483.74 2,135,219,504.14
2033 100
48,000.00 45,818.25 2,199,276,089.27
2034 100
48,000.00 47,192.80 2,265,254,371.94
2035 100
48,000.00 48,608.58 2,333,212,003.10
2036 100
48,000.00 50,066.84 2,403,208,363.19
2037 100
48,000.00 51,568.85 2,475,304,614.09
2038 100
48,000.00 53,115.91 2,549,563,752.51
2039 100
48,000.00 54,709.39 2,626,050,665.09
2040 100
48,000.00 56,350.67 2,704,832,185.04

As for the On-site Hydrogen which will be supplied by ALLY HI-TECH Co. An

initial investment for the hydrogen plant and a monthly fee will be needed.
 Table 7
Hydrogen Cost 20 years
On-Site Hydrogen Cost

Initial Investment 70,638,360.00

Year Yearly Free

2021 219,648.00
2022 219,648.00
2023 219,648.00
2024 219,648.00
2025 219,648.00
2026 219,648.00
2027 219,648.00
2028 219,648.00
2029 219,648.00
2030 219,648.00
2031 219,648.00
2032 219,648.00
2033 219,648.00
2034 219,648.00
2035 219,648.00
2036 219,648.00
2037 219,648.00
2038 219,648.00
2039 219,648.00
2040 219,648.00
Total Cost: 4,392,960.00
Total Cost with Investment: 75,031,320.00

7.7 Utilities

Utilities such as Reboilers and Cooling Towers will be used in the manufacturing plant in

order to minimize the cost and optimize the design process. The electricity and water used will also

be accounted as a utility.

The reboiler would require a fuel in order to produce steam in the design process. Propane

gas would serve as a fuel for the reboiler.

7.7.1Electricity

Power is supplied by Peninsula Electric Cooperative (PENELCO) and as of

January 2017, the rate is 5.5561 PhP/kWh. Table shows the different power rate charge of

PENELCO as of January 2017.

Table 7
PENELCO Electric Rates in Bataan
Rate Charges Residential Commercial Industrial
PhP/kWh 8.2746 6.9099 5.5561

Table 7
Power Requirement of Process
Equipment Power (kW)
Pump 59.68
Cooling Tower 83.0
Compressors 38,421.84
Total Power (kW)
38564.52
Total kWh/day
925548.48
Total kWh/year
309,133,192.3

Electric consumption

Basis and assumptions:

 For boiler, warehouse and delivery houses, the standard electric consumption is

6.10 kWh/m2/yr. (Source:ouc.bizenergyadvisor.com)

 For wastewater treatment plant and parking lot, the electricity consumption is

based from number of LED bulbs installed in the respected area. 25 bulbs for

Wastewater treatment plant. These will cover the entire coverage area for

installation of bulbs. Together with parking lot, 15 bulbs will be installed.

 Assuming that each bulb is 14 Watts. This will consume 8016 hours per year.

(Source: consumerenergysolutions.com)

 For the buildings and offices such as Administration building, fire station,

canteen and clinic, they will be considered depending on their building

category. In each building category, there will be varying usage rates, lightings,

appliances and occupants. (Source:

https://www.riigiteataja.ee/en/eli/520102014002/consolide)

 The electric consumption per area per year (kWh/m2 per year) will be then

multiplied to the respected area for the determination of kWh per year.

Table 7
Electricity consumption in buildings
Building Length Width Area Electricity Electricity

(m) (m) (m2) Consumption (kWh/year)

(kWh/m2/yr)

Administration 50 50 2500 53.41 133525.00

Security 1
29.82 7168.22
(Main) 20.03191 12 240.3829

Security 2 12.5824 20.03191 252.0495 29.82 7516.12

Wastewater

Treatment - 2805.60

Plant 20 30 600

Fire Station 18.8976 29.76369 562.4623 32.15 18083.16

Delivery House
6.1 5732.71
1 35.4806 26.48737 939.7878
 Delivery House
6.1 5732.71
2 35.4806 26.48737 939.7878

Warehouse 43.8484 32.02423 1404.211 6.1 8565.69

Canteen 35.052 15 525.78 32.15 16903.83

Clinic 15 5 75 42.19 3164.25

Boiler 25 15 375 6.1 2287.50

Parking Lot 150 16 2400 - 9352.92

Total 10814.46 220837.69

Table 7
Total Cost of Electricity
Year Turndown Buildings (₱) Process (₱) Electricity Cost

Capacity (₱/year) with 3.17 %

inflation rate

2021 50 1,226,996.29 858,787,464.87 860,014,461.16

2022 100 1,265,892.07 1,772,022,055.01 1,773,287,947.08

2023 100 1,306,020.85 1,828,195,154.15 1,829,501,175.01

2024 100 1,347,421.71 1,886,148,940.54 1,887,496,362.25

2025 100 1,390,134.98 1,945,939,861.96 1,947,329,996.94

2026 100 1,434,202.26 2,007,626,155.58 2,009,060,357.84

2027 100 1,479,666.47 2,071,267,904.71 2,072,747,571.18

2028 100 1,526,571.90 2,136,927,097.29 2,138,453,669.19

2029 100 1,574,964.23 2,204,667,686.28 2,206,242,650.50

2030 100 1,624,890.59 2,274,555,651.93 2,276,180,542.52

2031 100 1,676,399.62 2,346,659,066.10 2,348,335,465.72

 2032 100 1,729,541.49 2,421,048,158.49 2,422,777,699.98

2033 100 1,784,367.96 2,497,795,385.12 2,499,579,753.07

2034 100 1,840,932.42 2,576,975,498.82 2,578,816,431.25

2035 100 1,899,289.98 2,658,665,622.14 2,660,564,912.12

2036 100 1,959,497.47 2,742,945,322.36 2,744,904,819.83

2037 100 2,021,613.54 2,829,896,689.08 2,831,918,302.62

2038 100 2,085,698.69 2,919,604,414.12 2,921,690,112.81

2039 100 2,151,815.34 3,012,155,874.05 3,014,307,689.39

2040 100 2,220,027.89 3,107,641,215.26 3,109,861,243.14

7.7.2 Fuel

Propane will be used as the fuel for the fired heater. As of December 2017, the

propane price is at PHP 24.975 per kilograms. Data is gathered from (indexmundi.com).

The price per kg of propane is at PHP 65.45.

Table 7
Propane consumption per year
Raw Flow rate (kg/hr) kg/Year MT/Year PHP/kg PHP/yr
Material
C3H8 519.3127 4,162,810.603 4162.81 24.975 103,966,194.81

The table below shows the cost of propane consumption per year.

Table 7
Cost of Propane per year
Year Turndown Quantity Price (₱/kg) Fuel Cost(₱/year) with

Capacity (kg/year) 3.17% inflation rate

2021 50% 2,081,405.30 24.98 51,983,097.37

 2022 100% 4,162,810.603 25.77 107,261,923.19

2023 100% 4,162,810.603 26.58 110,662,126.15

2024 10% 4,162,810.603 27.43 114,170,115.55

2025 100% 4,162,810.603 28.30 117,789,308.21

2026 100% 4,162,810.603 29.19 121,523,229.28

2027 100% 4,162,810.603 30.12 125,375,515.65

2028 100% 4,162,810.603 31.07 129,349,919.50

2029 100% 4,162,810.603 32.06 133,450,311.95

2030 100% 4,162,810.603 33.07 137,680,686.83

2031 100% 4,162,810.603 34.12 142,045,164.61

2032 100% 4,162,810.603 35.20 146,547,996.32

2033 100% 4,162,810.603 36.32 151,193,567.81

2034 100% 4,162,810.603 37.47 155,986,403.91

2035 100% 4,162,810.603 38.66 160,931,172.91

2036 100% 4,162,810.603 39.88 166,032,691.09

2037 100% 4,162,810.603 41.15 171,295,927.40

2038 100% 4,162,810.603 42.45 176,726,008.30

2039 100% 4,162,810.603 43.80 182,328,222.76

2040 100% 4,162,810.603 45.19 188,108,027.42

7.7.3 Water
Water is being supplied by the Hermosa Water District which is used for water

recycling facility. Based on the Indicative Rates, The price of water in

commercial/industrial setting in Bataan is PhP 16.75 per cubic meter of water.

 Table 7
Initial Water Requirement for the Process
Volume Flow (m3) 26,093.76405

Initial investment for water (Php) 437,070.55

Table 7
Makeup Water Requirement for in Cooling Process
Volume Flow (m3/hr) 92.27

Volume of Water (m3/day) 2214.48

Volume of Water (m3/year) 739,636.32

Table 7
Make up Water Requirement in the Steam Generation Process
Volume Flow (m3/hr) 989.39

Volume of Water (m3/day) 23,745.377

Volume of Water (m3/year) 7,930,954.75

Also, according to Metcalf and Eddy, each employee consumed 20 gal/day.

Water requirement for human usage:

𝐿 1 𝑑𝑎𝑦 1 𝑚3
75.7082 ( )( )
𝑑𝑎𝑦 − 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 24 ℎ𝑜𝑢𝑟𝑠 1000 𝐿

L
𝑊𝑎𝑡𝑒𝑟 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑓𝑜𝑟 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 = 3.1545
ℎ𝑟 − 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠
For 8 shift employees per day,
𝑊𝑎𝑡𝑒𝑟 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
L 8ℎ𝑟𝑠 1 𝑚3
= 3.1545 𝑥 𝑥 203 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑥 334 𝑑𝑎𝑦𝑠 𝑥
ℎ𝑟 − 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 1 𝑑𝑎𝑦 1000 𝐿
= 1711.05 𝑚3 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
Table 7
Consumed Water for domestic and process uses per Year
Year Turndown Cubic meter used in Cubic meter used for

Capacity process employees

2021 50% 4335295.53 1711.05

2022 100% 8670591.07 1711.05

2023 100% 8670591.07 1711.05

2024 100% 8670591.07 1711.05

2025 100% 8670591.07 1711.05

2026 100% 8670591.07 1711.05

2027 100% 8670591.07 1711.05

2028 100% 8670591.07 1711.05

2029 100% 8670591.07 1711.05

2030 100% 8670591.07 1711.05

2031 100% 8670591.07 1711.05

2032 100% 8670591.07 1711.05

2033 100% 8670591.07 1711.05

2034 100% 8670591.07 1711.05

2035 100% 8670591.07 1711.05

2036 100% 8670591.07 1711.05

2037 100% 8670591.07 1711.05

2038 100% 8670591.07 1711.05

2039 100% 8670591.07 1711.05

2040 100% 8670591.07 1711.05

Table 7
Price of water consumed per year
Year Turndown Capacity Annual Water Cost (₱) with

inflation rate of 3.17%

2021 50% 72,644,860.27

2022 100% 149,865,836.06

2023 100% 154,616,583.06

2024 100% 159,517,928.75

2025 100% 164,574,647.09

2026 100% 169,791,663.40

2027 100% 175,174,059.13

2028 100% 180,727,076.80

2029 100% 186,456,125.14

2030 100% 192,366,784.30

2031 100% 198,464,811.37

2032 100% 204,756,145.89

2033 100% 211,246,915.71

2034 100% 217,943,442.94

2035 100% 224,852,250.08

2036 100% 231,980,066.41

2037 100% 239,333,834.51

2038 100% 246,920,717.07

2039 100% 254,748,103.80

2040 100% 262,823,618.69

7.7.4 Telecommunication
Communication cost are essential to sustain supplier-customer relations and

support employees’ daily functions PLDT is operating in towns of Pilar, Limay, Orani,

Hermosa, Dinalupihan, Abucay and Balanga City of Bataan. The cost for Monthly rental

rates of telecommunication are given in the table below:

Table 7
Monthly Rental Rates of Telecommunication
Particulars Cost (₱)
PLDT Fibrbiz 100 25,000
PLDT Plan600 600

The table below shows the total cost of telecommunication (landline and

data/internet connection) consumed by the plant in monthly and annual basis. The burst

speed is up tp 200 Mbps. Monthly fee is Php 6,000. Landline is PHP 600 per month.

Installation fee is PHP 5000.

Table 7
Total Landline& Data/Internet Cost per year
Year Turndown Capacity Bundle Cost (₱) Installation Annual Cost (₱)

Cost (₱)

2021 50% 307,200.00 5000 312,200.00

2022 100% 307,200.00 0 307,200.00

2023 100% 307,200.00 0 307,200.00

2024 100% 307,200.00 0 307,200.00

2025 100% 307,200.00 0 307,200.00

2026 100% 307,200.00 0 307,200.00

2027 100% 307,200.00 0 307,200.00

2028 100% 307,200.00 0 307,200.00

 2029 100% 307,200.00 0 307,200.00

2030 100% 307,200.00 0 307,200.00

2031 100% 307,200.00 0 307,200.00

2032 100% 307,200.00 0 307,200.00

2033 100% 307,200.00 0 307,200.00

2034 100% 307,200.00 0 307,200.00

2035 100% 307,200.00 0 307,200.00

2036 100% 307,200.00 0 307,200.00

2037 100% 307,200.00 0 307,200.00

2038 100% 307,200.00 0 307,200.00

2039 100% 307,200.00 0 307,200.00

2040 100% 307,200.00 0 307,200.00

The table below shows the summary of the total utilities consumed in a yearly basis.

Table 7
Total cost of utilities per year
Year Turndown Capacity Total (₱)
2021 50%
984,954,618.80
2022 100%
2,030,722,906.33
2023 100%
2,095,087,084.22
2024 100%
2,161,491,606.55
2025 100%
2,230,001,152.24
2026 100%
2,300,682,450.52
2027 100%
2,373,604,345.96
2028 100%
2,448,837,865.49
2029 100%
2,526,456,287.59
2030 100%
2,606,535,213.65
2031 100%
2,689,152,641.70
 2032 100%
2,774,389,042.19
2033 100%
2,862,327,436.59
2034 100%
2,953,053,478.10
2035 100%
3,046,655,535.11
2036 100%
3,143,224,777.33
2037 100%
3,242,855,264.53
2038 100%
3,345,644,038.18
2039 100%
3,451,691,215.95
2040 100%
3,561,100,089.25

Consumables

7.8.1 Cost of catalyst

The catalyst needed for the production of MIBK is Palladium catalyst which

will be supplied by Yurui(Shanghai) Chemical Co., Ltd, Ruiyuan Group. The needed

amount of catalyst is 3069.36 kg.

Table 7
Cost of Catalyst per year
Year Turndown MTPY Price per MT Cost (PhP)

Capacity

2021 50
3.069 52,000.00 159,588.00
2022 100
3.069 53,560.00 164,375.64
2023 100
3.069 55,166.80 169,306.91
2024 100
3.069 56,821.80 174,386.12
2025 100
3.069 58,526.46 179,617.70
2026 100
3.069 60,282.25 185,006.23
2027 100
3.069 62,090.72 190,556.42
 2028 100
3.069 63,953.44 196,273.11
2029 100
3.069 65,872.04 202,161.30
2030 100
3.069 67,848.21 208,226.14
2031 100
3.069 69,883.65 214,472.93
2032 100
3.069 71,980.16 220,907.11
2033 100
3.069 74,139.57 227,534.33
2034 100
3.069 76,363.75 234,360.36
2035 100
3.069 78,654.67 241,391.17
2036 100
3.069 81,014.31 248,632.90
2037 100
3.069 83,444.73 256,091.89
2038 100
3.069 85,948.08 263,774.65
2039 100
3.069 88,526.52 271,687.89
2040 100
3.069 91,182.31 279,838.52

7.8.2 Transportation costs

Table 7
Annual Transportation Cost
Target Trucks Price of Distance Fuel used Weekly Annual
Market used per fuel per per Km Cost Transportation
week L
Manila 14 44.98 107.5 0.3 20,308.00 967,070

Table 7
Annual Shipping Fee
Source Destination Shipping Fee (PhP) Annual Shipping Fee

(PhP)

Manila Port Indonesia

102,219.00 5,315,388.00
 Manila Port Thailand
81,107.00 4,217,564.00
Manila Port China
90,779.00 4,720,508.00
Manila Port Vietnam
74,607.00 3,879,564.00
Total 18,133,024.00

Operating Labor Cost

The Salary of the employees of the MIKCo. manufacturing plant is based from the average

monthly salary of employees in the Philippines. This was based from the Payscale Human Capital

Philippines. The Withholding tax was based on the TRAIN Tax law implemented on the year 2018.

Benefits were based on the common benefits given by the companies which includes the PAGIBIG,

Health Insurance, Performance Bonus, Transportation Benefits etc. The 13-month pay is a required

bonus given to the employees.

Table 7
Employee Salaries
Employee Salary in Pesos
Position Basic Salary Benefits 13 Month Total Monthly (PhP)
Yearly (PhP) (PhP) (PhP)

CEO
6,040,236.00 206,936.00 503,353.00 6,750,525.00
Plant Director
4,266,180.00 101,949.00 355,515.00 4,723,644.00
Production
Manager 634,848.00 8,510.00 52,904.00 696,262.00
Production
Assistant 180,000.00 417.00 15,000.00 195,417.00
Quality Assurance
Manager 613,320.00 10,027.00 51,110.00 674,457.00
Quality Assurance
Analyst 248,268.00 2,546.00 20,689.00 271,503.00
Maintenance
Supervisor 386,076.00 8,333.00 32,173.00 426,582.00
 Maintenance
Personnel 167,436.00 6,264.00 13,953.00 187,653.00
Research and
Development
Manager 914,748.00 25,760.00 76,229.00 1,016,737.00
Research and
Development
Analyst 224,400.00 4,542.00 18,700.00 247,642.00
Human resource
526,428.00 8,281.00 43,869.00 578,578.00
Safety Officer
303,792.00 6,383.00 25,313.00 335,488.00
Security
181,200.00 1,949.00 15,100.00 198,249.00
Medical
596,784.00 20,000.00 49,732.00 666,516.00
Sales and
Marketing
Manager 669,492.00 17,173.00 55,791.00 742,456.00
Sales
Representative 187,644.00 60,000.00 15,637.00 263,281.00
Logistics
880,836.00 14,795.00 73,403.00 969,034.00
Corporate
accounts Manager 491,496.00 11,923.00 40,958.00 544,377.00

Since, the manufacturing plant will be operating 24 hours a day, there will be 3 shifts for

the production team and 1 shift for the administration. In Table 7.18, shows the total number of

employees required for the manufacturing plant.

Table 7
Total Number of Employees
No. of Employees per Shift Total No. of Employees

CEO
1 1
Plant Director
4 4
Production Manager
1 4
Production Assistant
25 100
 Quality Assurance

Manager
1 4
Quality Assurance

Analyst
3 12
Maintenance Supervisor
1 4
Maintenance Personnel
8 32
Research and

Development Manager
1 1
Research and

Development Analyst
3 3
Human resource
3 3
Safety Officer
1 1
Security
5 20
Medical
2 8
Sales and Marketing

Manager
1 1
Sales Representative
3 3
Logistics
1 1
Corporate accounts

Manager
1 1
TOTAL 65
203

Table 7 Shows the annual net labor cost of the employees. The employees will be given a

2% increase in the salary yearly.

Table 7
Total Labor cost
Year Net Cost (PhP)

2021
77,812,640.00
2022
79,368,892.80
2023
80,956,270.66
2024
82,575,396.07
2025
84,226,903.99
2026
85,911,442.07
2027
87,629,670.91
2028
89,382,264.33
2029
91,169,909.62
2030
92,993,307.81
2031
94,853,173.97
2032
96,750,237.44
2033
98,685,242.19
2034
100,658,947.04
2035
102,672,125.98
2036
104,725,568.50
2037
106,820,079.87
2038
108,956,481.46
2039
111,135,611.09
2040
113,358,323.32
Land Cost

The manufacturing plant will be located in Hermosa Ecozone Industrial Park (HEIP) in the

province of Bataan. The land cost in HEIP is PHP 4,000 per sq. m. Since the manufacturing plant

will be occupying 9 hectares, the land will be paid in a span of 20 years.

Table 7
Total Land Cost
Year Land Area Land Cost Per Year

2021 90000
18,000,000
2022 90000
18,000,000
2023 90000
18,000,000
2024 90000
18,000,000
2025 90000
18,000,000
2026 90000
18,000,000
2027 90000
18,000,000
2028 90000
18,000,000
2029 90000
18,000,000
2030 90000
18,000,000
2031 90000
18,000,000
2032 90000
18,000,000
2033 90000
18,000,000
2034 90000
18,000,000
2035 90000
18,000,000
2036 90000
18,000,000
2037 90000
18,000,000
 2038 90000
18,000,000
2039 90000
18,000,000
2040 90000
18,000,000
Total
360,000,000.00

Depreciation Cost

The depreciation cost will be calculated using the straight-line method and the

declining balance method. The end life of 20 years will be assumed to have a zero-market

value.

Assumptions:

B = Cost Basis = 1,007,279,492.48

Book Value = k = (1-R) kB

Declining Balance Depreciation Percentage R1 = 1.5/N

Straight Line Depreciation Percentage R2 = 1/N

Table 7
Depreciation in 20 Years
Declining

Book Value Balance Straight Line Depreciation

Year (PhP) Method (PhP) Method (PhP) Cost (PhP)

0 1,021,965,342.32 76,647,400.67 < 51,098,267.12 76,647,400.67

1 945,317,941.65 70,898,845.62 < 49,753,575.88 70,898,845.62

2 874,419,096.02 27,947,125.52 < 48,578,838.67 27,947,125.52

3 846,471,970.50 60,662,824.79 < 49,792,468.85 60,662,824.79

 4 785,809,145.72 56,113,112.93 < 49,113,071.61 56,113,112.93

5 729,696,032.79 51,904,629.46 < 48,646,402.19 51,904,629.46

6 677,791,403.33 48,011,782.25 < 48,413,671.67 48,011,782.25

7 629,779,621.08 44,410,898.58 < 48,444,586.24 48,444,586.24

8 581,335,034.85 41,080,081.19 < 48,444,586.24 48,444,586.24

9 532,890,448.61 37,999,075.10 < 48,444,586.24 48,444,586.24

10 484,445,862.37 35,149,144.47 < 48,444,586.24 48,444,586.24

11 436,001,276.13 32,512,958.63 < 48,444,586.24 48,444,586.24

12 387,556,689.90 30,074,486.73 < 48,444,586.24 48,444,586.24

13 339,112,103.66 27,818,900.23 < 48,444,586.24 48,444,586.24

14 290,667,517.42 25,732,482.71 < 48,444,586.24 48,444,586.24

15 242,222,931.19 23,802,546.51 < 48,444,586.24 48,444,586.24

16 193,778,344.95 22,017,355.52 < 48,444,586.24 48,444,586.24

17 145,333,758.71 20,366,053.86 < 48,444,586.24 48,444,586.24

18 96,889,172.47 18,838,599.82 < 48,444,586.24 48,444,586.24

19 48,444,586.24 17,425,704.83 < 48,444,586.24 48,444,586.24

20 0.00 16,118,776.97 < 0.00 0.00

Fixed Capital Cost

The Fixed Capital Cost will be the sum of the Depreciation Cost and the Land Cost.

Table 7
Annual Fixed Cost
Year Land Cost Depreciation Cost Fixed Cost

2018 18,000,000 0 18,000,000

2019 18,000,000 0 18,000,000

2020 18,000,000 0 18,000,000

2021 18,000,000 76,647,400.67 94,647,401

2022 18,000,000 70,898,845.62 88,898,846

2023 18,000,000 27,947,125.52 45,947,126

2024 18,000,000 60,662,824.79 78,662,825

2025 18,000,000 56,113,112.93 74,113,113

2026 18,000,000 51,904,629.46 69,904,629

2027 18,000,000 48,011,782.25 66,011,782

2028 18,000,000 48,444,586.24 66,444,586

2029 18,000,000 48,444,586.24 66,444,586

2030 18,000,000 48,444,586.24 66,444,586

2031 18,000,000 48,444,586.24 66,444,586

2032 18,000,000 48,444,586.24 66,444,586

2033 18,000,000 48,444,586.24 66,444,586

2034 18,000,000 48,444,586.24 66,444,586

2035 18,000,000 48,444,586.24 66,444,586

2036 18,000,000 48,444,586.24 66,444,586

2037 18,000,000 48,444,586.24 66,444,586

2038 0 48,444,586.24 48,444,586

2039 0 48,444,586.24 48,444,586

2040 0 48,444,586.24 48,444,586

Real Property Tax

Assessed Value=80% Fair Market Value

Maximum RPT Rate=1% Assessed Value

Year Cost of Land Assessed Value Real Property Tax

2018 18,000,000.00 14,400,000.00 144,000.00

2019 18,000,000.00 14,400,000.00 144,000.00

2020 18,000,000.00 14,400,000.00 144,000.00

2021 18,000,000.00 14,400,000.00 144,000.00

2022 18,000,000.00 14,400,000.00 144,000.00

2023 18,000,000.00 14,400,000.00 144,000.00

2024 18,000,000.00 14,400,000.00 144,000.00

2025 18,000,000.00 14,400,000.00 144,000.00

2026 18,000,000.00 14,400,000.00 144,000.00

2027 18,000,000.00 14,400,000.00 144,000.00

2028 18,000,000.00 14,400,000.00 144,000.00

2029 18,000,000.00 14,400,000.00 144,000.00

2030 18,000,000.00 14,400,000.00 144,000.00

2031 18,000,000.00 14,400,000.00 144,000.00

2032 18,000,000.00 14,400,000.00 144,000.00

2033 18,000,000.00 14,400,000.00 144,000.00

2034 18,000,000.00 14,400,000.00 144,000.00

2035 18,000,000.00 14,400,000.00 144,000.00

2036 18,000,000.00 14,400,000.00 144,000.00

2037 18,000,000.00 14,400,000.00 144,000.00

Insurance Cost

Insurance serves as a financial protection against losses from an insurance company.

Table shows the insurance cost per year.

Insurance cost=1% ×Fixed capital cost

Year Fixed Capital (PhP) Insurance Cost (PhP)

2018 18,000,000.00 180,000.00

2019 18,000,000.00 180,000.00

2020 18,000,000.00 180,000.00

2021 94,647,400.67 946,474.01

2022 88,898,845.62 888,988.46

2023 45,947,125.52 459,471.26

2024 78,662,824.79 786,628.25

2025 74,113,112.93 741,131.13

2026 69,904,629.46 699,046.29

2027 66,011,782.25 660,117.82

2028 66,444,586.24 664,445.86

2029 66,444,586.24 664,445.86

2030 66,444,586.24 664,445.86

2031 66,444,586.24 664,445.86

2032 66,444,586.24 664,445.86

2033 66,444,586.24 664,445.86

2034 66,444,586.24 664,445.86

2035 66,444,586.24 664,445.86

 2036 66,444,586.24 664,445.86

2037 66,444,586.24 664,445.86

2038 48,444,586.24 484,445.86

2039 48,444,586.24 484,445.86

2040 48,444,586.24 484,445.86

Other Estimated Cost

Operating Supervision Cost = 20% of Operating Labor Cost (Silla, 2003)

Quality Control and Laboratory Cost = 20% of Operating Labor (Silla, 2003)

Maintenance Cost = 5% of ISBL Investment (Towler, 2008)

Operating Supplies Cost = 0.75% of Fixed Capital Cost (Silla, 2003)

Environmental charges = 1% of ISBL plus OSBL (Towler & Sinnott, 2013)

Year Operating Quality Control Maintenance Operating

Supervision Cost and Laboratory Cost ($PhP) Supplies Cost

(PhP) Cost (PhP) (PhP)

2021 15,562,528.00 15,562,528.00 51,098,267.12 709,855.51

2022 15,873,778.56 15,873,778.56 51,098,267.12 666,741.35

2023 16,191,254.13 16,191,254.13 51,098,267.12 344,603.45

2024 16,515,079.21 16,515,079.21 51,098,267.12 589,971.19

2025 16,845,380.80 16,845,380.80 51,098,267.12 555,848.35

2026 17,182,288.41 17,182,288.41 51,098,267.12 524,284.72

2027 17,525,934.18 17,525,934.18 51,098,267.12 495,088.37

2028 17,876,452.87 17,876,452.87 51,098,267.12 498,334.40

 2029 18,233,981.92 18,233,981.92 51,098,267.12 498,334.40

2030 18,598,661.56 18,598,661.56 51,098,267.12 498,334.40

2031 18,970,634.79 18,970,634.79 51,098,267.12 498,334.40

2032 19,350,047.49 19,350,047.49 51,098,267.12 498,334.40

2033 19,737,048.44 19,737,048.44 51,098,267.12 498,334.40

2034 20,131,789.41 20,131,789.41 51,098,267.12 498,334.40

2035 20,534,425.20 20,534,425.20 51,098,267.12 498,334.40

2036 20,945,113.70 20,945,113.70 51,098,267.12 498,334.40

2037 21,364,015.97 21,364,015.97 51,098,267.12 498,334.40

2038 21,791,296.29 21,791,296.29 51,098,267.12 363,334.40

2039 22,227,122.22 22,227,122.22 51,098,267.12 363,334.40

2040 22,671,664.66 22,671,664.66 51,098,267.12 363,334.40

Permits, Certificates and Licenses

Every industry should establish the following government permits and licenses, that should

be paid and accomplish before the business operates. Table --. Summarizes all the required permits

and licenses.

Table 7
Permits and Licenses
Permits and Licenses Cost (PHP)

Sanitary Permit 1,000.00

Occupancy Permit 5,000.00

Building Permit 25,000.00

Mayor’s Permit 2,500.00

Business Permit 0
 Location Clearance 6,000.00

Occupational Permit 10,000.00

Fire Permit 0

Community Tax Certificate 10,500.00

Environmental Tax 10,000.00

Environmental Compliance Certificate (Fee,

Discharge Permit, Hazardous Waste ID 13,810.00

Registration, Procedural Screening Fee,

Database Management Fee, Processing Fee, stc.

Registration at Philippine Health Insurance 0

(PhilHealth)

BIR Certificate 500.00

SEC Company Name Verification and 40.00

Reservation

SEC Company Registration and Pre-registered 2,665.00

TIN

Barangay Clearance 800.00

Notarize Articles of Incorporation and 500.00

Treasurer’s Affidavit at the Notary

Pay Registration Fee and Documentary Stamp 4,670.00

Taxes at AAB (Authorized Agent Bank)

Special Books of Account 0.00

Printing or Receipts and Invoices 4,000.00

 Registration at Social Security System 0.00

Registration at Philippine Health Insurance 0.00

(PhilHealth)

Application for Certificate of Registration 0.00

(COR) and TIN at BIR

Total (PHP) 93,385

Cost (PHP)
Permits and licenses
Permits for starting a business 93,385

Permits for registering property 776,948

Permits for dealing with construction 782,533

permits

Total 1,652,886

Annual Revenue

The Revenue of the MIKCo. manufacturing plant will be coming from the two products:

Methyl Isobutyl Ketone and Di-Isobutyl Ketone.

Table 7
Revenue Per Year
Products Mass of Product per Price of Product per Revenue per year

year (MTPY) MT

MIBK 30584 111,280 3,403,387,520.00

DIBK 7782.4 151,320 1,177,632,768.00

Table 7
Revenue from MIBK with inflation
Year Turndown Capacity MTPY Price per MT Cost (PhP)

2021 50
15,290.00 111,280.00 1,701,693,760.00
2022 100
30,584.00 114,618.40 3,505,489,145.60
2023 100
30,584.00 118,056.95 3,610,653,819.97
2024 100
30,584.00 121,598.66 3,718,973,434.57
2025 100
30,584.00 125,246.62 3,830,542,637.60
2026 100
30,584.00 129,004.02 3,945,458,916.73
2027 100
30,584.00 132,874.14 4,063,822,684.23
2028 100
30,584.00 136,860.36 4,185,737,364.76
2029 100
30,584.00 140,966.17 4,311,309,485.70
2030 100
30,584.00 145,195.16 4,440,648,770.28
2031 100
30,584.00 149,551.01 4,573,868,233.38
2032 100
30,584.00 154,037.55 4,711,084,280.38
2033 100
30,584.00 158,658.67 4,852,416,808.80
2034 100
30,584.00 163,418.43 4,997,989,313.06
2035 100
30,584.00 168,320.98 5,147,928,992.45
2036 100
30,584.00 173,370.61 5,302,366,862.23
2037 100
30,584.00 178,571.73 5,461,437,868.09
2038 100
30,584.00 183,928.88 5,625,281,004.14
2039 100
30,584.00 189,446.75 5,794,039,434.26
2040 100
30,584.00 195,130.15 5,967,860,617.29
Table 7
Revenue of DIBK with Inflation
Year Turndown Capacity MTPY Price per MT Cost (PhP)

2021 50
3,891.30 151,320.00 2,064,986,186.99
2022 100
7,782.40 155,859.60 2,064,986,186.99
2023 100
7,782.40 160,535.39 2,064,986,186.99
2024 100
7,782.40 165,351.45 2,064,986,186.99
2025 100
7,782.40 170,311.99 2,064,986,186.99
2026 100
7,782.40 175,421.35 2,064,986,186.99
2027 100
7,782.40 180,683.99 2,064,986,186.99
2028 100
7,782.40 186,104.51 2,064,986,186.99
2029 100
7,782.40 191,687.65 2,064,986,186.99
2030 100
7,782.40 197,438.28 2,064,986,186.99
2031 100
7,782.40 203,361.43 2,064,986,186.99
2032 100
7,782.40 209,462.27 2,064,986,186.99
2033 100
7,782.40 215,746.14 2,064,986,186.99
2034 100
7,782.40 222,218.52 2,064,986,186.99
2035 100
7,782.40 228,885.08 2,064,986,186.99
2036 100
7,782.40 235,751.63 2,064,986,186.99
2037 100
7,782.40 242,824.18 2,064,986,186.99
2038 100
7,782.40 250,108.90 2,064,986,186.99
2039 100
7,782.40 257,612.17 2,064,986,186.99
2040 100
7,782.40 265,340.54 2,064,986,186.99
Interest

The Loan will be coming from the Bank of Commerce. According to Engr. Conrad

Monterola the manufacturing plant will be borrowing 50 percent of the total capital. The total

capital includes the ISBL, OSBL, Engineering Cost, Contingency Charges, Working Capital, Water

Initial Investment, and Start-up Cost. The Interest of the Bank of Commerce is 7% and will be paid

within 10 years.

Table.
Loan Amount in Million
Total Capital PhP 4,841,529,284.86

Bank Loan PhP 2,420,764,642.43

Capital PhP 2,420,764,642.43

Annuity Calculation

𝑖(1 + 𝑖)𝑛
𝐴=𝑃( )
(1 + 𝑖)𝑛 − 1

0.07(1 + 0.07)10
𝐴 = 2,420,764,642.43 ( )
(1 + 0.07)10 − 1

𝐴 = 𝑃ℎ𝑃 344,662,424.5
Cash Flow Analysis Summary:

Figure 7. Calculation of Capital

Figure 7. Calculation of Total Annual Fixed Cost

Figure 7. Calculation of Total Annual Variable Cost

Figure 7. Calculation of Total Annual Revenue

Figure 7 Payback and ROI