Economic Analysis

Introduction

Manufacturing Plants are designed that 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 2 of this paper, as well as the market

projection of the product and raw materials required. Class 3 and 4 estimates is conducted

for the preliminary assessment. Class 3 and 4 estimates had an inaccuracy range of 30% -

40%, and the project definition was limited from 2% - 4%. The class estimates is

determined from the book “Chemical Engineering Design” by Towler (2013). It was

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

This chapter provides a more accurate estimation of the investment since class 1

and 2 estimates is 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 is based on the

production of raw materials, 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 is determined. The Table 108

186
includes the summarization of the ISBL, OSBL, engineering cost, and contingency

charges. Table 109 includes the Project cost (Variable and Fixed Cost of production) and

the revenue.

Table 108
Fixed Capital Cost
FIXED CAPITAL INVESTMENT
Engineering Cost  Management of project cost
 Construction supervision and services
 Administrative Charges
Inside Direct Cost  Road Construction, Sewerage, and
Battery foundation
Limits  Manufacturing Equipment: Reactor,
Investment Distillation Column, Heat Exchangers,
(ISBL) 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  Medical and Fire Facilities
(OSBL)  Laboratories for product analysis
 Wastewater Treatment Plant
 Cooling Towers
 Reboilers
 Administration Offices, Canteens, and
Control Rooms
Contingency Charges  Currency Fluctuations
 Price inflations
Based on the observation of the researchers on CED by Towler and Sinnott (2013)

Table 109
Cost and Revenues
COSTS AND REVENUES
Fixed Cost Production  Supervision
 Labor
 Maintenance
 Property Taxes
 Rent of Land
 Sales and Marketing Cost

187
Table 109
Continued
Variable Cost Production  Raw Materials
 Utilities such as cooling waters, electricity,
fuel, and steam
 Wastewater Treatment
 Packaging and Shipment
Revenue  Sales from Products
Based on the observation of the researchers on CED by towler and Sinnott (2013)

The plant is to operate for 8000 hours (Towler & Sinnott, 2013). This implies that

the manufacturing plant is to operate for 334 days every year. Employees is to 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 Eve to

be allotted for plant maintenance. For other holidays without maintenance, the plant is still

to operate, given that the employees are to be provided a double pay.

Fixed Capital Investment

ISBL Capital Cost. Price Quotations of equipment, raw materials, and products

come from the different vendors. This means that the quotations fall into the class

1 estimate. The vendors are e-mailed directly providing the specification sheets and

system drawing. The price quotations are used as the basis; since it is purchased the

same year, while the purchasing cost is 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

are provided by the vendors, this method falls into the class 3 estimate of the capital

cost of the manufacturing plant.

188
 Ce = cost of equipment

M = total number of equipment

Table 110
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)
Adapted from “Chemical Engineering Design” by Towler and Sinott (2013, p.315)

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

transport of shipments from port-to-port. This is obtained using a freight rate

calculator available online at worldfreightrates.com. Lastly, duties and taxes

imposed by the Bureau of Customs (2017), 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.

Total Cost for Heat exchangers. The purchasing Cost of the Heat

Exchangers are obtained via Aspen HYSIS V8.8 Exchanger Design ratings.

The material used for the construction of the heat exchangers are carbon

189
steel and stainless steel. Table 111 shows the summation cost and the

adjusted cost.

Table 111
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
Based on aspen HYSIS v8.8

Total Cost for the Reboilers. The purchasing Cost of the reboilers is

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 112 shows the summation cost and the adjusted cost.

Table 112
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
Based on aspen HYSIS v8.8

190
Total Cost for the Condensers. The purchasing Cost of the Condensers is

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 113 shows the summation cost and the adjusted cost.

Table 113
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
Based on aspen HYSIS v8.8

Total Cost for the Distillation Column. The purchasing Cost of the

distillation column is 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 114 shows the summation cost, and the adjusted cost.

Table 114
Distillation Column Purchasing Cost
Equipment Sieve Trays Price (PhP)
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
Based on Wuxi Nanquan Pharmaceutical Chemical Container Factory

191
Total Cost for the Compressors. The purchasing Cost of the compressors

is 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 115 shows the summation cost and the adjusted cost.

Table 115
Compressors Purchasing Cost
Equipment Power (kW) Price (PhP)
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
Based on via Aspen HYSIS V8.8

Total Cost for the Pumps. The purchasing Cost of the pumps is obtained

from Shanghai Kaiyuan Pump Industry. The material used for the

construction of the pumps is carbon steel and stainless steel. Table 116

shows the summation cost and the adjusted cost.

Table 116
Pumps Purchasing Cost
Equipment Power (hp) Price (PhP)
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

192
Table 116
Continued
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
Based on the price given by Shanghai Kaiyuan Pump Industry

Total Cost for the Storage Tanks. The purchasing Cost of the storage tanks

is obtained Taishan Group Taian Boao International Trading Co., Ltd. The

material used for the construction of the storage tanks is carbon steel. Table

117 shows the summation cost, and the adjusted cost.

Table 117
Storage Tanks Purchasing Cost
Equipment Quantity Volume Price per Price (PhP)
(m3) unit (PhP/
unit)
AST (Acetone 30 202.03
Storage Tank) 2,886,000.00 86,580,000.00
DST 6 165.44
(Diisobutyl
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
Based on the price given by Taishan Group Taian Boao International
Trading Co., Ltd

193
Total Cost for the Reactor. The purchasing Cost of the reactor is obtained

from a quotation of a company named Qingdao ShinDah Machinery Co.,

Ltd. The material of construction is stainless steel for the reactor. The

purchasing price is listed in the Table 118:

Table 118
Reactor Purchasing Cost
Equipment Volume (m3) Price (PhP)
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
Based on the price given by Qingdao ShinDah Machinery Co., Ltd

Total Cost for the Separator. The purchasing Cost of the reactor is obtained

from a quotation of a company named Shreewire Process Technology

Private Limited. The material of construction is stainless steel for the

reactor. The purchasing price is listed in Table 119:

Table 119
Separator Purchasing Cost
Equipment Volume (m3) Price (PhP)
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
Based on the price given by Shreewire Process Technology Private Limited

Total Cost for the Decanter. The purchasing Cost of the reactor is obtained

from a quotation of a company named Puyang Zhongshi Group Co., Ltd..

The material of construction is carbon steel for the reactor. The purchasing

price is listed in the Table 120:

194
Table 120
Decanter Purchasing Cost
Equipment Volume (m3) Price (PhP)
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
Based on the price given by Puyang Zhongshi Group Co., Ltd.

Total Cost for the Pipe. The purchasing Cost of the pipes is obtained from

Torrent Engineering & Equipment Inc. Table 121 contains the cost per

length of specific pipe size.

195
Table 121
Pipe Costing

Based on the price given by Torrent Engineering & Equipment Inc

196
Table 121
Pipe Costing Continuation 1

Based on the price given by Torrent Engineering & Equipment Inc

197
Table 121
Pipe Costing Continuation 2

Based on the price given by Torrent Engineering & Equipment Inc

198
Table 121
Pipe Costing Continuation 3

Based on the price given by Torrent Engineering & Equipment Inc

199
 Table 122
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
Based on the price given by Torrent Engineering & Equipment Inc

OSBL Capital Cost

Total Cost for Cooling Tower. The purchasing Cost of the cooling tower is

obtained via Aspen HYSIS V8.8 Exchanger Design ratings. The material used for

the construction of the cooling tower is carbon steel. Table 123 shows the

summation cost and the adjusted cost.

Table 123
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
Based on Aspen HYSIS V8.8

Total Cost for Fired Heater. The purchasing Cost of the fired heater is obtained

via Aspen HYSIS V8.8 Exchanger Design ratings. The material used for the

construction of the fired heater is carbon steel. Table 124 shows the summation cost

and the adjusted cost.

Table 124
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
Based on Aspen HYSIS V8.8

200
Total Cost of Wastewater treatment plant. The purchasing costs of the wastewater

treatment plant is obtained from an estimation provided by Dr. Nolan Tolosa

(2018), where the amount of flow is used as a basis for the cost estimation. He

specifies that for a daily cubic meter of flow, the cost is $ 477.92.

Table 125
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
Note. WWTP = Wastewater Treatment plant; and m3 = cubic meter. Based on Dr.
Nolan Tolosa

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 are based on the Philippine Statistics Authority and the costing of the

parking lots is based on the E.P. Malto Asphalt Construction.

Table 126
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
Note. m = square meter. Adapted from “Geotechnical Engineering Calculations
2

and Rules of thumb” by R. Rajapakse, and R. Rajapakse, 2008. Copyright (2008)

by Butterworth - Heinemann

201
Table 127
Cost of Asphalt
Materials used for Parking Cost (PhP) Per Square Meter
Lots
Asphalt 182.00
Based on E.P. Malto Asphalt Construction

Table 128
Total Cost of Buildings
Facility Area (m2) Cost (PhP)
Administration 2500.00 38,156,300.00
Security 1 (Main) 240.38 993,242.92
Security 2 252.05 1,041,448.37
Wastewater Treatment
Plant 600.00 5,328,648.00
Fire Station 562.46 2,324,049.23
Delivery House 1 939.79 718,110.65
Based on table 126

Table 129
Total Cost of Buildings 2
Facility Area (m2) Cost (PhP)
Delivery House 2 939.79 718,110.65
Warehouse 1404.21 5,802,087.52
Canteen 525.78 4,082,219.01
Clinic 75.00 582,309.00
Boiler House 375.00 2,911,545.00
Parking Lot
2400.00 436,800.00
Total 10814.46
63,094,870.35
2
Note. m = square meter. Based on table 126 and table 127

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.

202
 Table 130
Perimeter Wall of the Manufacturing Plant
Unit Cost Quantity Line Cost (PhP)
per square
foot

Block wall: concrete blocks 185.64 24,009.6 4,457,142.04

are assembled into a wall square feet
with mortar, reinforcing
steel, and 2" thick cap;
including waste and misc.
material.

Footing with #4 reinforcing 185.64 4,001.6 ft 759,460.00

bar steel including waste
and misc. material.

Equipment: footing trencher 185.64 4,001.6 ft 199,760.08

and power cement mixer;
including transport and fuel.

Labor 185.64 3,221 hours 5,694,728.00

Total 11,111,090.12
Based on Craftsman Estimator Costbook

Total costs of transportation trucks. The transportation of the products is carried

by 12 ISUZU NHR Cab Chassis 71.

Table 131
Transportation Trucks
Cost Quantity Total Cost (PhP)
ISUZU NHR Cab 1,189,240.00 12
Chassis 71 14,270,880.00
ISO tank (20 MT) 468,000.00 12 5,616,000.00
Total Cost 19,886,880.00
Based on https://www.isuzuphil.com/products/n-series

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. As a

203
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 (Towler & Sinnott, 2013).

This is 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

Contingency charges are supplementary fee charged by the Engineering,

Procurement and Construction company to allow variation from the cost estimate

(Towler & Sinnott, 2013). It is also identified that a minimum contingency charge of

10% of ISBL plus OSBL cost should be used on all projects. This is 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. A typical figure for petrochemical plants is 15% of the

fixed capital (Towler & Sinnott, 2013).

204
 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 consists 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 are accounted in this section.

Raw material costs. The Raw materials needed in the Manufacturing plant are the

Acetone and Hydrogen. The Acetone is produced by A.P.C Chemicals while the

hydrogen is provided by Linde on-site. The price of the Acetone is provided by the

Table 132. Since the hydrogen is provided by Linde on-site, the price also includes

the equipment. The inflation rate of Acetone and hydrogen according to the

Philippine Statistics Authority (2017) is 3.0%.

Table 132
Acetone Price
Raw Material Flowrate Price (PhP) Cost per year (PhP)
Acetone 48,000 32,136 1,542,528,000.00
Based on the price of A.P.C Chemicals

205
Table 133
Acetone Cost 20 years
Year Turndown MTPY Price per Cost (PhP)
Capacity MT
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
Based on table 132 with inflation of 20 years

As for the On-site Hydrogen which is supplied by ALLY HI-TECH Co., an initial

investment for the hydrogen plant and a monthly fee is needed.

Table 134
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

206
Table 134
Continued
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
Based on the price of ALLY HI-TECH Co.

Utilities. Utilities such as Reboilers and Cooling Towers are used in the

manufacturing plant in order to minimize the cost and optimize the design process.

The electricity and water used are accounted as utilities.

The reboiler requires a fuel in order to produce steam in the design process.

Propane gas serves as a fuel for the reboiler.

Electricity. Power is supplied by Peninsula Electric Cooperative

(PENELCO) as of January 2017, the rate is 5.5561 PhP/kWh. Table 135

shows the different power rate charge of PENELCO as of January 2017.

Table 135
PENELCO Electric Rates in Bataan
Rate Charges Residential Commercial Industrial
PhP/kWh 8.2746 6.9099 5.5561
Note. kWh = kilowatt-hour. Retrieved from
http://www.penelco.com/tangway/index.php?option=content&task=view&
id=44&Itemid=66

207
Table 136
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
Note. kWh = kilowatt-hour; kW = kilowatt. Based on aspen HYSIS V8.8

Electric consumption

Basis and assumptions:

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

consumption is 6.10 kWh/m2/yr.;

 For wastewater treatment plant and parking lot, the electricity

consumption is based on number of LED bulbs installed in the respected

area, 25 bulbs for Wastewater treatment plant. These cover the entire

coverage area for installation of bulbs. Together with parking lot, 15

bulbs are to be installed. Assuming that each bulb is 14 Watts. This

consumes 8016 hours per year.;

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

station, canteen and clinic, they are considered depending on their

building category. In each building category, there are varying usage

rates, lightings, appliances and occupants; and

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

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

208
Table 137
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
6.1 5732.71
House 1 35.4806 26.48737 939.7878
Delivery
6.1 5732.71
House 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
2
Note. m = meters; m = square meters; kWh = kilowatt-hour. Retrieved from
www.consumeenergysolutions.com,
https://www.riigiteataja.ee/en/eli/520102014002/consolide, and
ouc.bizenergyadvisor.com

Table 138
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

209
Table 139
Total Cost of Electricity 2
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
Retrieved from www.consumeenergysolutions.com,
https://www.riigiteataja.ee/en/eli/520102014002/consolide, and
ouc.bizenergyadvisor.com

Fuel. Propane is used as the fuel for the fired heater. As of December 2017,

the propane price is at PHP 24.975 per kilogram.

Table 140
Propane Consumption Per Year
Raw Flow kg/Year MT/Year PHP/kg PHP/yr
Material rate
(kg/hr)
C3H8 519.3127 4,162,810.603 4162.81 24.975 103,966,194.81
Retrieved from indexmundi.com

The Table 141 shows the cost of propane consumption per year.

Table 141
Cost of Propane Per Year
Year Turndo Quantity Price Fuel Cost(₱/year)
wn (kg/year) (₱/kg) with 3.17% inflation
Capacity 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

210
Table 141
Continued
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
Based on table 140 which is projected for 20 years

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 142
Initial Water Requirement for the Process
Volume Flow (m3) 26,093.76405
Initial investment for water (Php) 437,070.55

Retrieved from aspen HYSIS V8.8 and hermosa water district

Table 143
Makeup Water Requirement for in Cooling Process
Volume Flow (m3/hr) 92.27
3
Volume of Water (m /day) 2214.48
3
Volume of Water (m /year) 739,636.32
Retrieved from aspen HYSIS V8.8 and hermosa water district

211
 Table 144
Make up Water Requirement in the Steam Generation Process
Volume Flow (m3/hr) 989.39
3
Volume of Water (m /day) 23,745.377
Volume of Water (m3/year) 7,930,954.75
Retrieved from aspen HYSIS V8.8 and hermosa water district

Each employee consumed 20 gal/day (Metcalf and Eddy, 2003).

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-hours per day employees,

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 145
Consumed Water for Domestic and Process Uses Per Year
Year Turndown Cubic meter used Cubic meter used
Capacity in process for 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

212
Table 145
Continued
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
Based on hermosa water district projected for 20 years

Table 146
Price of Water Consumed Per Year
Year Turndown Annual Water Cost (₱) with
Capacity 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
Based on table 142, table 143, and table 144 which is projected for 20
years

Telecommunication. Communication cost isessential to sustain supplier-

customer relations and support employees’ daily functions PLDT is

213
 operating in towns of Pilar, Limay, Orani, Hermosa, Dinalupihan, Abucay,

and Balanga City of Bataan. The cost for Monthly rental rates of

telecommunication is given in Table 147:

Table 147
Monthly Rental Rates of Telecommunication
Particulars Cost (₱)
PLDT Fibrbiz 100 25,000
PLDT Plan600 600
Retrieved from http://smenation.com.ph/business-solutions/internet-
connection/fibrbiz-website, and https://pldthome.com/landline-
plus/postpaid

Table 148 shows the total cost of telecommunication (landline and

data/internet connection) consumed by the plant on monthly and annually

basis. The burst speed is up to 200 Mbps. Monthly fee is Php 25,000.

Landline is PHP 600 per month. Installation fee is PHP 5000.

Table 148
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

214
Table 148
Continued
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
Based on table 147 with 20-year projection

Table 149 shows the summary of the total utilities consumed on a yearly basis.

Table 149
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
Based on Table 138, table 141, table 145, table 146, and table 148

Consumables

Cost of catalyst. The catalyst needed for the production of MIBK is

Palladium catalyst which is supplied by Yurui(Shanghai) Chemical

215
 Co., Ltd, Ruiyuan Group. The needed amount of catalyst is 3069.36

kg.

Table 150
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
Based on yurui (shanghai) chemical co., ltd, ruiyuan group with 20-year
projection

Transportation costs

Table 151
Annual Transportation Cost
Target Truck Pric Distanc Fue Weekly Annual
Marke s used e of e l Cost Transportatio
t per fuel use n
week per d
L per
Km
Manila 14 44.9 107.5 0.3 20,308.0 967,070
8 0
Based on https://www.costperlitre.com/

216
 Table 152
Annual Shipping Fee
Source Destination Shipping Fee Annual Shipping
(PhP) 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
Based on http://worldfreightrates.com/freight

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. Benefits is 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 153
Employee Salaries
Employee Salary in Pesos
Position Basic Salary Benefits 13 Month Total Monthly
Yearly (PhP) (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

217
 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
Retrieved from https://www.payscale.com/

Since, the manufacturing plant is to operate operating 24 hours a day, there

are three shifts for the production team. in Table 154, shows the total number of

employees required for the manufacturing plant.

Table 154
Total Number of Employees
No. of Employees per Shift Total No. of Employees
CEO 1 1
Plant Director 1 4
Production
Manager 4 4
Production
Assistant 25 100
Quality Assurance
Manager 1 4
Quality Assurance
Analyst 3 12
Maintenance
Supervisor 1 4
Maintenance
Personnel 8 32

218
 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
Based on the observation of the researchers in the number of employees in Malayan
Colleges Laguna

Table 155 Shows the annual net labor cost of the employees. The employees

are given a 2% increase in the salary yearly.

Table 155
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

219
Table 155
Continued
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
Based on table 153 which is projected for 20 years

Land Cost. The manufacturing plant is to 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 is to occupy nine hectares, the land

is paid in a span of 20 years.

Table 156
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
Retrieved from www.sciencepark.com.ph/en/hermosa-ecozone-industrial-park-
heip/

220
 Depreciation Cost. The depreciation cost is to be calculated using the straight-line

method and the declining balance method. The end life of 20 years is to 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 157
Depreciation in 20 Years
Declining
Balance Straight Line Depreciation
Year Book Value (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
Based from the calculated ISBL of the researchers

221
 Fixed Capital Cost. The Fixed Capital Cost is to be the sum of the Depreciation

Cost and the Land Cost.

Table 158
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
Based on table 156, and table 157

Real Property Tax

Assessed Value=80% Fair Market Value

Maximum RPT Rate=1% Assessed Value

Table 159
Real Property Tax Cost
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

222
Table 159
Continued
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
Adapted from CED by Towler and Sinnott (2013, p. 303)

Insurance Cost. Insurance serves as a financial protection against losses from an

insurance company. Table 160 shows the insurance cost per year.

Insurance cost=1% ×Fixed capital cost (Towler & Sinnott, 2013)

Table 160
Insurance 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

223
Table 160
Continued
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
Adapted from CED by Towler and Sinnott (2013, p. 303)

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)

Table 161
Other Estimated Cost
Year Operating Quality Control and Maintenance Operating
Supervision Cost Laboratory Cost Cost (PhP) Supplies Cost
(PhP) (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

224
Table 161
Continued
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
Adapted from CED by Towler and Sinnott (2013, p. 303)

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 162. summarizes all the required permits and

licenses.

Table 162
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

225
Table 162
Continued
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
Retrieved from https://psa.gov.ph/content/construction-statistics-approved-building-
permits-first-quarter-2017-preliminary-results

Table 163
Total Cost for Permits and Licenses
Permits and licenses Cost (PHP)
Permits for starting a business 93,385
Permits for registering property 776,948
Permits for dealing with 782,533
construction permits
Total 1,652,886
Retrieved from https://psa.gov.ph/content/construction-statistics-approved-building-
permits-first-quarter-2017-preliminary-results

Annual Revenue

The Revenue of the MIKCo. manufacturing plant it so be collected from the two

products: MIBK and DIBK.

Table 164
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
Note. MTPY = metric ton per year; MT = metric ton. Based on the price given by asian-
chem

226
Table 165
Revenue from MIBK with Inflation
Year Turndown MTPY Price per MT Cost (PhP)
Capacity
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
Note. MTPY = metric ton per year; MT = metric ton. Based on table 164 with 3% inflation
for 20 years

Table 166
Revenue of DIBK with Inflation
Year Turndown MTPY Price per MT Cost (PhP)
Capacity
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

227
Table 166
Continued
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
Note. MTPY = metric ton per year; MT = metric ton.Based on table 164 with 3% inflation
for 20 years

Interest. The Loan is to be approved by the Bank of Commerce. According to Engr.

Conrad Monterola the manufacturing plant is to borrow 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 is to be paid within 10 years.

Table 167
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
Based on Engr. Conrado Monterola

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

228
Cash Flow Analysis Summary:

Figure 7 Payback and ROI

Based on the summary of all costs and revenue

229