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Question 1 (15 Marks)
Question 1 (15 Marks)
DEPARTMENT OF ENGINEERING
MID-SEMESTER EXAMINATION
i. The fixed capital cost was invested into the project at the beginning of year
2020 and the working capital was also made available in the course of the
same year.
ii. The plant will start producing at the beginning of year 2021.
iii. The plant will operate at 80% of its full capacity for the first year and
thereafter the capacity will be increased to 90% until the end of the project.
The plant capacity is 2500 kg/ h.
iv. The working capital represents 12% of the fixed capital costs.
v. The production cost (excluding capital charges) is always 18% of the product
selling price.
vi. The product selling price at the beginning of 2021 is MWK 22000 per ton.
vii. Capital charges represents 10% of fixed capital cost.
viii. The interest rate is 12.6%.
ix. The tax is 30%.