Determine what the minimum price differential is

Problem: Your company (XYZ Inc.) produces a mixed stream of heptane/octane (50/50 mole%) at 50,000 barrels/day. The value of this stream is that of gasoline, which has a current price of $75/barrel (taken to be equivalent to 42 gallons). The company has an opportunity to improve its profitability by producing high-purity heptane (containing < 1 mole% octane) and high-purity octane (containing < 1 mole% heptane) as two separate hydrocarbon solvents (HS). The products are to be branded as HC-7 and HC-8, each of which sells for $x/barrel above the gasoline value. A distillation column is required to produce the two HS products. Associated equipment includes a total condenser, a kettle reboiler, and a feed preheater; pumps for the feed, reflux, distillate product and bottoms product; coolers for the HC-7 and HC-8 products; storage tanks for the feed, HC-7 and HC-8. Your objective is to determine what the minimum price differential ($x/barrel) is, at which this process becomes an acceptable investment opportunity if the company's MARR can vary between 10~25%.


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Accounting Basics: Determine what the minimum price differential is
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