A proposal to manufacture 4969 ton/yr of a halogenated organic intermediate is set out below:
Estimated fixed capital cost $ 2405461
Construction time 2 years
Working capital 20% of FCI
Operating cost (exc. depreciation) $ 555.40 per ton of product
Revenue from sales $ 800 per ton of product
Plant life 10 years
Salvage value $ 328876
Income tax rate 43.696 %
Depreciation Life 7 years im 20%
Assume 50% of the total FCI is spent in first year of construction period
Use Straight line depreciation.
No Start-up expense
Land component of FCI is 20%.
What would the cash flow be for year 1. (Hint: You should not depreciate land)