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1 CAPEX (Six Tenths Rule)

Dollar to Rand
C1
S2
S1
n
C2 (2004)
CEPCI (2004)

2 CAPEX (Step Counting)


R
$

15.47
2,750,000
250000
50000
0.6
7,222,951
444.2

N
Q
C ($)
C (1998)
CEPCI (1998)
CEPCI (2015, May)
C (2015)

Your formula isnt incorrect and


gives approximately the same
answer - however, the notes prefer
the pound version of the eqn

CEPCI (2015, May)

560.7

C2 (2015)
$

9,117,310
R 141,044,778

CRM

25,000,000

CWT

R
R

272,110

C2 (2015)
OPEX (Heuristics)

Chemical Engineer

Production Operator

Maintenance Supervisor

967,488

237,245

Production Foreman
COL

1,017,952

2,494,795

CUT

R
R

3,500,000
61,100,714

COM

https://ycharts.com/indicators/south_african_rand_excha

http://www.payscale.com/research/ZA
/Job=Chemical_Engineer/Salary
http://www.payscale.com/research/ZA
/Job=Production_Operator/Salary
http://www.payscale.com/research/ZA
/Job=Maintenance_Supervisor/Salary

3 CAPEX (Detailed Factorials)


$
R

1
250000
29,232,176
452,221,759
389.5
560.7
650,990,347

Heat Exchanger (E-200)


Pressure Vessel (C-200)
Pressure Vessel (V-200)
Pressure Vessel (V-201)
Plate & Frame (F-200)
Centrifugal CS (K-200)
PEC (2004)
https://ww
w.scribd.c
om/doc/2
63491765
/CheCostIndexJan-2015

CEPCI (2004, Year)

https://ww
w.scribd.c
om/doc/2
77921333
/CEPCI2015

CEPCI (2015, May)

$
$
$
$
$
$
$

273,000
320,000
88,000
60,000
92,016
276,998
1,110,015

444.2

PEC (2015)
PPC
Fixed Capital ($)
Fixed Capital (R)
3 shifts per day
and 1 relief

Coulson & Richardson

$
$

560.7
1,401,137
4,763,867.07

6,907,607.25

106,860,684

Coulson & Richardson

CAPEX (Piping Factorials)


Piping ($)
Piping (R)

$980,796 include a contractors fee of 5% for ins


15,931,562

Yes as we expect the piping to cost more and this is thus


a bargain

multiply by 1.45 not 1.4

http://www.slideshare.
net/jose2424/chapter7-capital-costestimation

a contractors fee of 5% for installation

Carbon
Steel

https://www.
scribd.com/d
oc/12101975
2/CEPCI

http://www
.chemeng
online.co
m/Assets/
File/CEP
CI_2002.p
df

Profitability Analysis
Deprecitaion (Years)
Scrap Value (%)
Tax Rate (%)
Escalation (%)
Discount Interest Rate (%)
Total Capital
Fixed Capital
Working Capital
Revenue
OP Costs
FC

5
10%
28%
5.23%
24%
R 122,889,787
R 106,860,684
R 16,029,103
R 87,500,000
R 61,100,714
R 19,718,910

VC
Depreciation

R 41,024,486
R 19,234,923

ROI (%)
Payback Period (Years)
NPV (Rands)

17.3%
3.46
-R 26,328,613

IRR (Rands)

Discounted Cash Flow Analysis


0
Revenue
Opererating Costs
Gross Profit
Depreciation
Net Profit
Cash Flow
R0
Discounted CF
R0
CCF
R0
DCCF
R0

http://www.inflation
.eu/inflationrates/southafrica/historicinflation/cpiinflation-southafrica-2015.aspx

only start from year 3


only take averages from the positive values ie year 3

3.16%
Comments
Sensitivity
IRR (%)

3.16

Ratio
0.86
0.89
0.91
1
1.06
1.14
1.29

Based on the plot the IRR appears to be more sensitive t


prices than higher ones owing to the slope being steep
lower price section

The NPV is positive thus the business is expected to de


than the minimum acceptable return. The IRR of 7.9%
than the 2016 SA inflation rate of 6.2% which is favoura
above the typical savings interest rate you would achi
savings account
http://www.tradi
ngeconomics.c
om/southafrica/inflationcpi

3
R 101,959,281
R 71,197,541
R 30,761,740
R 19,234,923
R 8,299,308
-R 78,542,603 -R 53,016,257
R 27,534,231
-R 63,340,809 -R 34,479,876
R 14,441,354
-R 78,542,603 -R 131,558,860
-R 104,024,628
-R 63,340,809 -R 97,820,685
-R 83,379,331
remember to escalate by (2+escalation)^year

4
5
6
R 107,291,751 R 112,903,110 R 118,807,943
R 74,921,172 R 78,839,549 R 82,962,858
R 32,370,579 R 34,063,561 R 35,845,085
R 19,234,923 R 19,234,923 R 19,234,923
R 9,457,672 R 10,676,619 R 11,959,316
R 28,692,596 R 29,911,542 R 31,194,240
R 12,136,210 R 10,203,059
R 8,581,126
-R 75,332,033 -R 45,420,491 -R 14,226,251
-R 71,243,120 -R 61,040,062 -R 52,458,936

om the positive values ie year 3


Our Class
Notes
Comments

RR appears to be more sensitive to lower gas


nes owing to the slope being steeper for the
lower price section

hus the business is expected to deliver more


cceptable return. The IRR of 7.9% is greater
ation rate of 6.2% which is favourable and is
avings interest rate you would achieve in a
savings account

http://southafrica.deposits.
org/

7
8
9
R 125,021,598 R 131,560,228 R 138,440,828
R 87,301,815 R 91,867,700 R 96,672,381
R 37,719,783 R 39,692,527 R 41,768,447
R 19,234,923
R0
R0
R 13,309,099 R 28,578,620 R 30,073,281
R 32,544,022 R 28,578,620 R 30,073,281
R 7,219,705
R 5,112,906
R 4,338,960
R 18,317,771 R 46,896,390 R 76,969,672
-R 45,239,231 -R 40,126,326 -R 35,787,366

10
R 145,681,283
R 101,728,347
R 43,952,936
R0
R 31,646,114
R 31,646,114
R 3,682,167
R 108,615,786
-R 32,105,198

11
R 153,300,414
R 107,048,739
R 46,251,675
R0
R 33,301,206
R 33,301,206
R 3,124,794
R 141,916,992
-R 28,980,404

12
R 161,318,026
R 112,647,388
R 48,670,637
R0
R 35,042,859
R 35,042,859
R 2,651,791
R 176,959,851
-R 26,328,613

Cumulative Cash Flow


Discounted Cumulative
Cash Flow