Management Project Economic Analysis - Essay Example

Management summary This project aimed at getting pure Cumene at a rate of 1300 lbmole/hr while using a feedstock of pure benzene and propylene. In this case, combining Benzene with Propylene results in the attainment of Cumene. The process has a byproduct of poly-di-isopropyl-benzene, which is easily separated by fractionation section. The byproduct is produced by an additional reactor. In order to attain a lower cost and higher purity, recycle streams is used in the process. Further, temperature regulation is essential since the reaction occurs at high temperatures.

With reference to economic analysis, FCI has a total of 16.53 M$ that comprises of 14.53 M$ ISBL and 2.0 M$ OSBL. As such, cash flow statement indicates that the payments will be rendered to full amounts within three years. Both the furnace and heat exchanger use ISBL while the feed tank uses OSBL. The impact of net present value (NPVO) on CumCF in a period of 3.2 years is 150.72 M$ and NPV 12 at an interest of 15% is 552.46 M$. The IRR is 24.28 % at a payback of 3.2 years, which implies that this project is viable and profitable.

Considering economic sensitivities, FCI changes because of utilities and product price. From the information gathered, this project is profitable since the involved product is worth and FCI is low in terms of the cost of product and raw material. Quantitative comparison indicates that changes in product price and FCI are critical and sensitive. In conclusion, this project is sensitive to product price changes, as well as FCI changes. However, the project is viable and profitable. Nevertheless, there is a need to gather economic information on Cumene price changes and establish the demand of the product.

For now, there is a need to increase the production rate of the product.