Calculation and Handling of "Risk" in Chemical Engineering Economy.
1953 Volume 17 Issue 12 Pages 478-485
Details
1953 Volume 17 Issue 12 Pages 478-485
(1) Develop. of Happel and Aries's principle.
(2) Three stages of profit duty.
(3) Research expense as self-insurance charge in chemical project.
(4) Economic evaluation of chemical, project.
(5) About a new formula.
In the author's opinion such definitions as follows are made: v=(p-pma)(1-t), where v=venture profit, p=project income (b.t.d.), pma=profit duty (b.t.d.);
and pma is classified into 3 stages, as: pma-1 which bears duty of tax, depreciation (d) and capital interest (i), pma-2 which bears further duty of risk which is specific to the chemical process, and pma-3 which bears 3rd duty of risk comprised in business competition and process obsolescence owing to scientific progress and circumstances of economic base on which business stands.
The proposed formula (8), used for calculating profit duty, is of a kind which allows condition for salvation, assuming:
a) Research expense or self-insurance charge of x·1 per year will insure the failure loss of (1-y)·I either totally (z=1) or partially (z=0-1), Hence z is a rate of salvation.
b) x=u·z·(1-y). rd, where z(1-y)·rd·I=amount of annual salvation income b.t., r=(1+i)n, d=i/[(1+i)n-1], and u is the rate of research expense divided by amount of salvation. i.e., u(=0-1) is a charge rate of insurance.
c) Equating net probable earning+salvation=r.d., we get,
Formula
(8)
Characteristics of the formula (8) are analyzed.
