Chemical Engineering Economics

The Purpose of Economics for Chemical Engineering

Most people earn money, make spending decisions and budget, and plans for future income, investments or spending. This truly is the practice of economics. Every engineer is expected to have some economic knowledge. The need for chemical engineering economic may include: decision making on equipment, projects, or plants; managing or controlling new or old operations, projects, or plants; cost estimating; budgeting, accounting, , balance sheet, operating statements; marketing, market research; and so on Plant equipment continuously needs repair, or modernization. The responsible engineers should know roughly what the comparative performance, cost, and payout periods are, even if there is a plant engineering group to do that type analysis, or t5he firm price quotations will be obtained Plant changes, such as initiated by the ever increasing costs of energy and environmental requirements, necessitates that many energy saving, pollution and hazardous waste control possibilities must be considered. The responsible engineer should conduct design and cost estimates, pay back, and economic calculations on the alternatives before making even preliminary recommendations.

BANGUNAN PABRIK KIMIA

Time Value of Money

Measurement of Discounted Cash Flow

Tahun ke 1 2 3 Nilai pada akhir tahun apabila $ 1 diinvestasikan $ 1.00 (1+i)1 = $ 1.100 $ 1.00 (1+i)2 = $ 1.210 $ 1.00 (1+i)3 = $ 1.331 Nilai sekarang apabila pada setiap akhir tahun dijanjikan $ 1 $ 1.00 / (1+i)1 = $ 0.909 $ 1.00 / (1+i)2 = $ 0.826 $ 1.00 / (1+i)3 = $ 0.751

4
5

$ 1.00 (1+i)4 = $ 1.464

$ 1.00 (1+i)5 = $ 1.611

$ 1.00 / (1+i)4 = $ 0.683

$ 1.00 / (1+i)5 = $ 0.621

6
dst.

$ 1.00 (1+i)6 = $ 1.772

$ 1.00 / (1+i)6 = $ 0.564

Catatan: i adalah tingkat suku bunga = 10% compounded annually

Measurement of future value of money

$1

$ 1.100

$ 1.210

Th 0

Th 1

Th 2

Measurement of discounted value of money

$ 0.909 $ 0.826

$ 1.000

$ 1.000

Discounting by [1/(1+i)n]

Th 0

Th 1

Th 2

TYPE OF INTEREST (money has an earning power

1)Simple interest I=Pni

P = Pokok n = periode, tahun i = interest rate, suku bunga

Contoh: Seseorang meminjam uang sebesar $ 1,000 dengan suku bunga 6% simple interest per tahun. Berapa bunga yang harus dibayarkan peminjam pada akhir tahun?

I=Pni I = $ 1,000 x 0,06 = $ 60 Jadi pokok dan bunga yang harus dibayarkan pada akhir tahun adalah $ 1,060

Type of interest

2) Compound interest
Interest is paid annually

Year
1 2 3 4

Amount Owned at Beginning of year $ 1,000 $ 1,000 $ 1,000 $ 1,000

Interest to be paid at End of year $ 60 $ 60 $ 60 $ 60

Amount Owned at End of year $1,060 $1,060 $1,060 $1,060

Amount to be paid by Borrower at End of year $ 60 $ 60 $ 60 $ 1,060

Interest is permitted to compounding

Year

Amount Owned at Beginning of year (A)

Interest to be paid at End of year (B)

Amount Owned at End of year (A + B)

Amount to be paid by Borrower at End of year

1
2 3 4

$ 1,000
$ 1,000 $ 1,000 $ 1,000

$ 1,000 x 0,06 = $ 60
$ 1,060 x 0,06 = $ 63,6 $ 1,123 x 0,06 = $ 67,42 $ 1,191 x 0,06 = $ 71,46

$ 1,000 (1,06) = $1,060

$ 1,000 (1,06) 2= $1,123 $ 1,000 (1,06) 3= $1,191 $ 1,000 (1,06) 4= $1,262

$0
$0 $0 $ 1,262

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CASH FLOW DIAGRAM

$ 1,000
Borrower point of view

Th 1 Th 0 $ 60

Th 2

Th 3

Th 4

$ 60

$ 60 $ 1.060

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CASH FLOW DIAGRAM

$ 1.060

Lender point of view $ 60 Th 0 Th 1 Th 2 Th 3 Th 4 $ 60 $ 60

$ 1,000

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INTEREST FORMULA
1) Single payment compound amount factor

Year

Amount at Beginning of year

Interest Earned during year

Amount Owned at End of year (A + B)

1
2 3 n

P
P(1 + i) P(1 + i)2 P(1 + i)n-1

Pi
P(1 + i) i P(1 + i)2 i P(1 + i)n-1 i

P + Pi
P(1 + i) + P(1 + i) P(1 + i)2 + P(1 + i)2 i

= P(1 + i)
= P(1 + i)2 = P(1 + i)3

P(1 + i)n-1 + P(1 + i)n-1 i = P(1 + i)n

Th 0

P
Th 1
Th 2 Th 3 Th n

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1) Single payment compound amount factor

Th 0

F
Th 1
Th 2 Th 3 Th n

F = P(1 + i)n F = P(F/P i, n )

Single payment compound amount factor

Given P to find F

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2) Single payment present worth factor

Th 0

F
Th 1
Th 2 Th 3 Th n

1 P = F -------(1 + i)n

P = F(P/F i, n )
Single payment present worth factor

Given F to find P

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3) Equal payment series compound amount factor

Th 0

Th 1

Th 2

Th 3

F A
Th n

(1 + i)n - 1 F = A ------------i

F = A(F/A i, n )
Equal paymentseries compound amount factor

Given A to find F

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4) Equal payment series sinking fund factor

Th 0

Th 1

Th 2

Th 3

F A
Th n

i A = F ------------(1+ i)n - 1

A = F(A/F i, n )
Equal paymentseries sinking fund factor

Given F to find A

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5) Equal payment series capital recovery factor

Th 0

A
Th 1
Th 2

A
Th 3

A
Th n

i A = P(1 + i)n ------------(1+ i)n - 1

A = P(A/P i, n )
Equal paymentseries capital recovery factor

Given P to find A

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Latihan Cash flow diagram dan Time Value of money

Berapa nilai sekarang dari pembayaran pada masa yang akan datang sebagai berikut: 1. Rp 5.500.000 6 tahun sejak sekarang pada tkt suku bunga 9% per tahun compounded annually 2. Rp 1.700.000 12 tahun sejak sekarang pada tkt suku bunga 6% per tahun compounded annually Berapa angsuran yang harus dibayar setiap tahun secara merata dari pinjaman sebagai berikut: 1. Rp 10.000.000 selama 5 tahun pada tkt suku bunga 10% per tahun compounded annually 2. Rp 16.000.000 selama 12 tahun pada tkt suku bungan 9% per tahun compounded annually

Economic Analysis of Investment

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Kriteria Kelayakan Investasi

Kriteria penilaian kelayakan proyek/investasi didasarkan pada metoda perhitungan sebagai berikut :

1. Payback Period 2. Internal Rate of Return (IRR) atau Discounted Cash Flow Rate of Return (DCFR) 3. Return On Investment (ROI), dan 4. Break Event Point

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Kriteria Kelayakan Investasi

Payback Period
Payback period atau payout period didefinisikan sebagai waktu yang diperlukan untuk mengembalikan modal yang diinvestasikan yang berasal dari keuntungan yang diperoleh dengan nilai suku bunga nol.
Payback period total plant investment working capital net yearly income after taxes depreciation

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Kriteria Kelayakan Investasi

Internal Rate of Return

Internal rate of return atau discounted cash flow rate of return menggambarkan tingkat suku bunga yang diperoleh untuk mengembalikan suatu investasi, atau disebut juga sebagai index profitability.

0 NPVj (i

) Fjn(1 i
n 0

NPV Net Pr esent Value dari investasi j J

net cash flow investasi j pada saat n Jn i * j interest rate, yang memenuhi persamaan tersebut diatas, disebut IRR F

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Rate of Return on Investment

Apabila present value dari expected benefit ditulis
Dan present value dari cost ditulis

Apabila present value dari expected benefit = present value dari cost, maka:

the rate of interest at which the difference between discounted benefits and costs is zero is called rate of return on investment

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Kriteria Kelayakan Investasi

Return On Investment
Cara sederhana untuk menentukan keuntungan suatu investasi
net income per year (average) Re turn On Investment ROI total investment

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Kriteria Kelayakan Investasi

Break Even Point

Metoda ini merupakan analisis sensitivitas, untuk menentukan tingkat produksi yang ekonomis dibawah kapasitas penuh sesuai desain.
Break Even Po int ( Efficiency) plant efficiency x fixed cos t of sales sales revenue var iable cos t

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Latihan Cash flow diagram dan Time Value of money

Sebuah perusahaan A melakukan investasi usaha sebesar 50 milyar rupiah, dan diperkirakan umur ekonomisnya selama 10 tahun setelah pabrik beroperasi. Masa konstruksi 1 tahun. Biaya operasional yang dikeluarkan perusahaan setiap tahun (di luar biaya depresiasi) adalah 6 milyar rupiah, sedangkan income perusahaan dari hasil penjualan produknya setiap tahun adalah 12 milyar. Setiap tahun income naik sebesar 10%. Pajak penghasilan 20% dari keuntungan setelah depresiasi. Depresiasi investasi dihitung dengan cara straight-line method dan tidak ada salvage value a) Buat cash flow diagram dari skema cash flow perusahaan tersebut. b) Berapa nilai saat ini dari Net Cash Flow perusahaan tersebut? (tingkat suku bunga adalah 10% per tahun compounded annually)

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Cash Flow Tahun ke 0 s/d ke 11

Thn ke investasi revenue depresiasi operational Profit Tax cost before tax 6 =20% x 5 Profit after Net cash tax flow P/F NPV

1
1 2 3 4 -50,000

5=2 -(3+4)

7 = 5-6

8 = 7+3

10 = 8 x 9
-50,000.00

12,000 13,200 14,520

5,000 5,000 5,000

6,000 6,000 6,000

1,000 2,200 3,520

200 440 704

800 1,760 2,816

5,800 6,760 7,816

0.90909 0.82645 0.75131

5,272.73 5,586.78 5,872.28

5
6 7 8 9 10 11

15,972
17,569 19,326 21,259 23,385 25,723 28,295

5,000
5,000 5,000 5,000 5,000 5,000 5,000

6,000
6,000 6,000 6,000 6,000 6,000 6,000

4,972
6,569 8,326 10,259 12,385 14,723 17,295

994
1,314 1,665 2,052 2,477 2,945 3,459

3,978
5,255 6,661 8,207 9,908 11,778 13,836

8,978
10,255 11,661 13,207 14,908 16,778 18,836

0.68301
0.62092 0.56447 0.51316 0.46651 0.4241 0.38554

6,131.82
6,367.77 6,582.27 6,777.27 6,954.54 7,115.70 7,262.21 13,923.37

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CASH FLOW DIAGRAM

(Net Cash Flow) Investor point of view
18,836 6,76 7,816

5,8

Th 0 Th 1 Th 2 Th 3

Th 10

50

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Net Present Value

63,923

Investor point of view

18,836 5,8 6,76 7,816

Th 0 Th 1 Th 2 Th 3 Th 10

100

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Calculation of Rates of Return

Thn ke investasi revenue depresiasi 1 1 -50,000 2 3 4 5 6 7 8 9 10 11 2 operation Profit Profit Net cash Tax al cost before tax after tax flow 6 =20% 3 4 5=2 -(3+4) x 5 7 = 5-6 8 = 7+3 -50,000 5,000 6,000 1,000 200 800 5,800 5,000 6,000 2,200 440 1,760 6,760 5,000 6,000 3,520 704 2,816 7,816 5,000 6,000 4,972 994 3,978 8,978 5,000 6,000 6,569 1,314 5,255 10,255 5,000 6,000 8,326 1,665 6,661 11,661 5,000 6,000 10,259 2,052 8,207 13,207 5,000 6,000 12,385 2,477 9,908 14,908 5,000 6,000 14,723 2,945 11,778 16,778 5,000 6,000 17,295 3,459 13,836 18,836

12,000 13,200 14,520 15,972 17,569 19,326 21,259 23,385 25,723 28,295

IRR = ?? 14,93%

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