Assume a high demand for the product and by-products that all produced goods are sold each year within the study period. Calculate the following: Internal Rate of Return Based on the computed values, decide whether the project is economically justifiable or not.
Assume a high demand for the product and by-products that all produced goods are sold each year within the study period. Calculate the following: Internal Rate of Return Based on the computed values, decide whether the project is economically justifiable or not.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Assume a high demand for the product and by-products that all produced goods are sold each year within the study
period. Calculate the following:
Based on the computed values, decide whether the project is economically justifiable or not.
Transcribed Image Text:Plant Design is a major requirement for you to be able to graduate BS ChE in Batangas State University. Suppose
you are a panelist, and you must evaluate if the design is feasible or not. You look at the breakdown of expenses,
possible revenues, etc. Here are some important chapters and discussions taken from a certain plant design.
Chapter 3: Market Study
This plant design, entitled "IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Philippines"
considers a 30-year period of study, starting 2021, after finishing its construction by 2020. All projections,
and interest rates set by the company shall be evaluated within this 30-year period. The inflation rate shall
not be included in the computation and a minimum attractive rate of return is set at 20%.
Chapter 4: Products
Our company produces ear dropper solution which can be sold for PHP. 125.00 per bottle. Annually, the
company can produce 1000 pallets of the product. Each pallet is stacked with 14 layers and each layer
consists of 8 boxes. A box contains 12 bottles of ear dropper for wholesale purposes. In addition, the
company also ventures for retail services.
Transcribed Image Text:By-products are also produced by the company including excess chemicals that can be sold for P1,200 per
15 grams. IIVSDROP produces a total of 7,820 kg of these excess chemicals per year.
Chapter 5: Construction and Process
The company shall be constructed at Nasugbu, Batangas for PHP. 550,320,000. The permits, land
acquisition documents and other legal matters amounted to PHP 27,000,000.
Chapter 6: Company Expenses
Below is the breakdown of yearly expenses of the company:
Amount in Pesos
11,200,000/yr.
5,580,300/yr.
Total Costs
Labor Costs
Preventive Maintenance
Costs
Safety Regulations and
Certifications
790,000/3 yrs.
PAG-IBIG
1,300,000/yr.
2,700,000/yr.
3,600,500/yr.
Employee Benefits and
Insurance
PhilHealth
Chapter 7: Consumer Benefits
Aside from the revenues from the products sold, annual benefits from the company include PHP.
15,000,000/yr.
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