Chapter 27: Economics and Finance¶

ILLUSTRATIVE EXAMPLE 27.5, Page number: 575¶

In :
#Variable declaration:
i = 0.03375                     #Rate of interest (%)
n = 9                           #Years to the end of life (yr)
P = 60000                       #Cost of exchanger ($) L = 500 #Salvage value ($)
x = 5                           #Time after 5 years (yr)

#Calculation:
SFDF = i/((1+i)**n-1)           #Sinking fund depreciation factor
UAP = (P-L)*SFDF                #Uniform annual payment ($) B = P-((P-L)/n)*x #Appraisal value after 5 years ($)

#Result:
print "1. The uniform annual payment made into the fund at the of the year is : $",round(UAP)," ." print "2. The appraisal value of the exchanger at the end of the fifth year is :$",round(B)," ."
1. The uniform annual payment made into the fund at the of the year is : $5768.0 . 2. The appraisal value of the exchanger at the end of the fifth year is :$ 26945.0  .

ILLUSTRATIVE EXAMPLE 27.6, Page number: 576¶

In :
from __future__ import division

#Variable declaration:
C = 150000                      #Capital cost ($) i = 7/100 #Interest rate n = 5 #Time (yr) OC = 15000 #Operating cost ($)
A = 75000                       #Annual cost for the old process ($) #Calculation: CRF = (i*(1+i)**n)/((1+i)**n-1) #Capital recovery factor IC = CRF*C #Initial cost ($)
AC = IC+OC                      #Total annualized cost ($) #Result: print "The annualized cost for the new heating system is :$",round(AC)," ."
if (AC<A):
print "Since this cost is lower than the annual cost of $75,000 for the old process, the proposed plan should be implemented." else : print "Since this cost is higher than the annual cost of$75,000 for the old process, the proposed plan should not be implemented."
The annualized cost for the new heating system is : $51584.0 . Since this cost is lower than the annual cost of$75,000 for the old process, the proposed plan should be implemented.

ILLUSTRATIVE EXAMPLE 27.7, Page number: 577¶

In :
from __future__ import division

#Variable declaration:
i = 12/100                          #Intersest rate
n = 12                              #Lifetime period (yr)
CC = 2625000                        #Capital cost ($) IC = 1575000 #Installation cost ($)
#From table 27.3:
Ic1 = 2000000                       #Income credit for double pipe ($/yr) Ic2 = 2500000 #Income credit for Shell-and-tube ($/yr)
AC1 = 1728000                       #Total annual cost for double pipe ($/yr) AC2 = 2080000 #Total annual cost for Shell-and-tube ($/yr)

#Calculation:
CRF = i/(1-(1+i)**-n)               #Capital recovery factor
DPc = (CC+IC)*CRF                   #Annual capital and installation costs for the DP unit ($/yr) STc = (CC+IC)*CRF #Annual capital and installation costs for the ST unit ($/yr)
DPp = Ic1-AC1                       #Profit for the DP unit ($/yr) STp = Ic2-AC2 #Profit for the ST unit ($/yr)

#Result:
print "The profit for the shell-and-tube unit is : $",round(DPp),"/yr ." print "The profit for the double pipe unit is :$",round(STp),"/yr ."
if (STp>DPp):
print "A shell-and-tube heat exchanger should therefore be selected based on the above economic analysis."
else :
print "A double pipe heat exchanger should therefore be selected based on the above economic analysis."
The profit for the shell-and-tube unit is : $272000.0 /yr . The profit for the double pipe unit is :$ 420000.0 /yr .
A shell-and-tube heat exchanger should therefore be selected based on the above economic analysis.

ILLUSTRATIVE EXAMPLE 27.8, Page number: 579¶

In :
from __future__ import division
from math import log

#Variable declaration:
m = 50000                       #Mass flowrate of the organic fluid (lb/h)
cP = 0.6                        #The heat capacity of the organic liquid (Btu/lb.°F)
T1 = 150                        #Initial temperature of organic fluid (°F)
T2 = 330                        #Final temperature of organic fluid (°F)
Ts1 = 358                       #Saturation temperature for 150 psia (°F)
Ts2 = 417                       #Saturation temperature for 300 psia (°F)
L1 = 863.6                      #Latent heat for 150 psia (Btu/lb)
L2 = 809                        #Latent heat for 300 psia (Btu/lb)
c1 = 5.20/1000                  #Cost for 150 psia ($/lb) c2 = 5.75/1000 #Cost for 300 psia ($/lb)
CI1 = 230                       #Cost index in 1998
CI2 = 360                       #Cost index in 2011
IF = 3.29                       #Installation factor
PF1 = 1.15                      #Pressure factors for 100 to 200 psig
PF2 = 1.20                      #Pressure factors for 200 to 300 psig
OP = 90/100                     #Plant on-stream operation factor
h = 365*24                      #Hours in a year (h)

#Calculation:
Q = m*cP*(T2-T1)                #Overall heta duty (Btu/h)
DT1 = Ts1-T1                    #Temperature driving force 1 for 150 psia (°F)
DT2 = Ts1-T2                    #Temperature driving force 2 for 150 psia (°F)
LMTD1 = (DT1-DT2)/log(DT1/DT2)  #Log-mean temperature difference for 150 psia (°F)
DT3 = Ts2-T1                    #Temperature driving force 1 for 300 psia (°F)
DT4 = Ts2-T2                    #Temperature driving force 2 for 300 psia (°F)
LMTD2 = (DT3-DT4)/log(DT3/DT4)  #Log-mean temperature difference for 1300 psia (°F)
A1 = Q/(138*LMTD1)              #Required heat transfer area for 150 psia (ft^2)
A2 = Q/(138*LMTD2)              #Required heat transfer area for 300 psia (ft^2)
BC1 = 117*A1**0.65              #Base cost for 150 psia ($) BC2 = 117*A2**0.65 #Base cost for 13000 psia ($)
C1 = BC1*(CI2/CI1)*IF*PF1       #Capital cost for 150 psia ($) C2 = BC2*(CI2/CI1)*IF*PF2 #Capital cost for 300 psia ($)
S1 = Q*(h*OP)/L1                #Steam requirement for 150 psia (lb/yr)
S2 = Q*(h*OP)/L2                #Steam requirement for 300 psia (lb/yr)
SC1 = S1*c1                     #Annual steam cost for 150 psia ($/yr) SC2 = S2*c2 #Annual steam cost for 300 psia ($/yr)

#Result:
print "1. The capital cost for 150 psia is : $",round(C1,-3)," ." print " The capital cost for 300 psia is :$",round(C2,-3)," ."
print "2. The annual steam cost for 150 psia is : $",round(SC1,-3),"/yr ." print " The annual steam cost for 300 psia is :$",round(SC2,-3),"/yr ."
if (C1<C2 and SC1>SC2):
print "The 300-psia exchanger costs less to purchase and install, but it costs more to operate. Choosing the more expensive, 150-psia exchanger is the obvious choice."
elif (C1>C2 and SC1<SC2):
print "The 150-psia exchanger costs less to purchase and install, but it costs more to operate. Choosing the more expensive, 300-psia exchanger is the obvious choice."
1. The capital cost for 150 psia is : $36000.0 . The capital cost for 300 psia is :$ 26000.0  .
2. The annual steam cost for 150 psia is : $256000.0 /yr . The annual steam cost for 300 psia is :$ 303000.0 /yr .
The 150-psia exchanger costs less to purchase and install, but it costs more to operate. Choosing the more expensive, 300-psia exchanger is the obvious choice.

ILLUSTRATIVE EXAMPLE 27.9, Page number: 581¶

In :
from __future__ import division
from sympy import symbols,solve
from scipy.optimize import fsolve

#Variable declaration:
TCC_TB = 2500000                   #Total capital cost ($) R_TB = 3600000 #R_TBevenue generated from the facility ($)
AOC_TB = 1200000                   #Annual operating costs ($) TCC_FB = 3500000 #Total capital cost ($)
R_FB = 5300000                     #R_TBevenue generated from the facility ($) AOC_FB = 1400000 #Annual operating costs ($)
n = 10                          	#Time of facility (yr)

#Calculation:
D = 0.1*TCC_TB                     #Depriciation ($) WC = 0.1*TCC_TB #Working capital ($)
TI = R_TB-AOC_TB-D                 #Taxable income ($) IT = 0.5*TI #Income tax to be paid ($)
A = R_TB-AOC_TB-IT                 #After-tax cash flow ($) def eqTB(i): x = (((1+i)**n-1)/(i*(1+i)**n))*A + (1/(1+i)**n)*WC #Equation for computing rate of return for TB unit y = WC + 0.5*TCC_TB + 0.5*TCC_TB*(1+i)**1 #Equation for computing rate of return for TB unit return x-y iTB = round(fsolve(eqTB,0.8)*100,1) #Rate of return for TB unit (%) D = 0.1*TCC_FB #Depriciation ($)
WC = 0.1*TCC_FB                    #Working capital ($) TI = R_FB-AOC_FB-D #Taxable income ($)
IT = 0.5*TI                        #Income tax to be paid ($) A = R_FB-AOC_FB-IT #After-tax cash flow ($)

def eqFB(i):
x = (((1+i)**n-1)/(i*(1+i)**n))*A + (1/(1+i)**n)*WC    #Equation for computing rate of return for FB unit
y = WC + 0.5*TCC_FB + 0.5*TCC_FB*(1+i)**1              #Equation for computing rate of return for FB unit
return x-y
iFB = round(fsolve(eqFB,0.8)*100,1) #Rate of return for FB unit (%)

#Results:
print "The rate of return for TB unit is:",round(iTB)," %."
print "The rate of return for FB unit is:",round(iFB,1)," %."
The rate of return for TB unit is: 40.0  %.
The rate of return for FB unit is: 44.8  %.

ILLUSTRATIVE EXAMPLE 27.10, Page number: 582¶

In :
#Variable declaration:
f = 100000                        #Flow rate of flue gas (acfm)
i = 0.1                           #Interest rate
#From table 27.4:
#For finned preheater:
ac1 = 3.1                         #Equipment cost ($/acfm) ac2 = 0.8 #Installation cost ($/acfm)
ac3 = 0.06                        #Operating cost ($/acfm-yr) ac4 = 14000 #Maintenance cost ($/yr)
#For 4-pass preheater:
bc1 = 1.9                         #Equipment cost ($/acfm) bc2 = 1.4 #Installation cost ($/acfm)
bc3 = 0.06                        #Operating cost for ($/acfm-yr) bc4 = 28000 #Maintenance cost ($/yr)
bn = 15                           #Lifetime of (yr)
#For 2-pass preheater:
cc1 = 2.5                         #Equipment cost ($/acfm) cc2 = 1.0 #Installation cost ($/acfm)
cc3 = 0.095                       #Operating cost for ($/acfm-yr) cc4 = 9500 #Maintenance cost for ($/yr)
cn = 20                           #Lifetime of (yr)

#Calculation:
#For Finned preheater:
aEC = f*ac1                        #Total equipment cost ($) aIC = f*ac2 #Total installation cost ($)
aOC = f*ac3                        #Total operating cost ($) aMC = f*ac4 #Total maintenance cost ($)
aCRF = (i*(1+i)**an)/((1+i)**an-1) #Capital recovery factor
aAEC = aEC*aCRF                    #Equipment annual cost ($/yr) aAIC = aIC*aCRF #Installation annual cost($/yr)
aAOC = ac3*f                       #Annual operating cost ($) aAMC = ac4 #Annual maintenance cost ($)
aTAC = aAEC+aAIC+aAOC+aAMC         #Total annual cost ($) #For 4-pass preheater: bEC = f*bc1 #Total equipment cost ($)
bIC = f*bc2                        #Total installation cost ($) bOC = f*bc3 #Total operating cost ($)
bMC = f*bc4                        #Total maintenance cost ($) bCRF = (i*(1+i)**bn)/((1+i)**bn-1) #Capital recovery factor bAEC = bEC*bCRF #Equipment annual cost ($/yr)
bAIC = bIC*bCRF                    #Installation annual cost($/yr) bAOC = bc3*f #Annual operating cost ($)
bAMC = bc4                         #Annual maintenance cost ($) bTAC = bAEC+bAIC+bAOC+bAMC #Total annual cost ($)
#For 2-pass preheater:
cEC = f*cc1                        #Total equipment cost ($) cIC = f*cc2 #Total installation cost ($)
cOC = f*cc3                        #Total operating cost ($) cMC = f*cc4 #Total maintenance cost ($)
cCRF = (i*(1+i)**cn)/((1+i)**cn-1) #Capital recovery factor
cAEC = cEC*cCRF                    #Equipment annual cost ($/yr) cAIC = cIC*cCRF #Installation annual cost($/yr)
cAOC = cc3*f                       #Annual operating cost ($) cAMC = cc4 #Annual maintenance cost ($)
cTAC = cAEC+cAIC+cAOC+cAMC         #Total annual cost ($) #Result: print "Total annual cost for finned preheater is :$",round(aTAC)," ."
print "Total annual cost for 4-pass preheater is : $",round(bTAC)," ." print "Total annual cost for 2-pass preheater is :$",round(cTAC)," ."
if (cTAC<aTAC and cTAC<bTAC):
print "According to the analysis, the 2-pass exchanger is the most economically attractive device since the annual cost is the lowest."
elif (bTAC<aTAC and bTAC<cTAC):
print "According to the analysis, the 4-pass exchanger is the most economically attractive device since the annual cost is the lowest."
elif (aTAC<cTAC and aTAC<bTAC):
print "According to the analysis, the finned exchanger is the most economically attractive device since the annual cost is the lowest."
Total annual cost for finned preheater is : $65809.0 . Total annual cost for 4-pass preheater is :$ 77386.0  .