Project ForgeA polymer plant with a production capacity of 10,000 tons per year has an overall yield of 70%, on mass basis (kg of product per kg of raw material). The raw material costs Rs 50,000 per ton. A process modification is proposed to increase the overall yield to 75% with an investment of Rs 12.5 crore. In how many years can the invested amount be recovered with the additional profit? _____
Explanation
Raw material used at 70% yield=10,000/0.70=14,285.7 t/yr, costing 14,285.7×50,000=71.43 crore/yr. At 75% yield=10,000/0.75=13,333.3 t/yr, costing 13,333.3×50,000=66.67 crore/yr. Annual savings (additional profit)=71.43−66.67=4.762 crore/yr. Payback period=Investment/Annual savings=12.5/4.762≈2.625 years.
Source: GATE CH 2014 (2014)
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