Design and economics notes

  • Capitalized cost

capitalized cost

  • Depreciation


  • Depreciation by Straight line method

depreciation by straight line method

  • Depreciation by Declining balance method

depreciation by declining balance method

  • Depreciation by sum of the year digit method

depreciation by sum of the year digit method

  • Depreciation by sinking fund method

depreciation by sum of the year digit method


depreciation by sum of the year digit method

  • Maximum allowable pressure
  • Maximum allowable pressure Spherical container

maximum allowable pressure for spherical container

  • Stress in cylindrical vessels

For cylindrical vessel circumferential stress is greater than longitudinal stress so it is taken as design stress

stress in cylindrical container

  • Circumferential stress (Hoop stress)

circumferential stress hoop stress

  • Longitudinal stress

longitudinal stress

  • Payback period

payback period

  • In case interest in calculated non-yearly time, total amount

calculation of interest in non yearly time

  • Simple rate of return in investment

simple rate of return

To pe updated

  • Present value of annuity at an interest rate i

present value of annuity

  • Discounted value

Discounted value also called present value is the current worth of a future sum of money given a specified rate of return

discounted value also called present value

  • Six-Tenth’s rule

Six-tenth’s rule for determining cost of equipment with different capacity

six tenth rule

  • Net present worth

Net present worth is defined as

net present value or net present worth

Net present value (NPV) or Net present worth (NPW) when maintenance cost is also involved along with initial investment

net present value or net present worth when maintenance cost is involved

  • Cost-Index rule

cost index rule

  • Payout period

payout period

  • Double declining method

For double declining method

double declining method

Depreciation to be calculated year by year using f mentioned above

  • Blank diameter for tori spherical head
  • Thickness < 25mm/inch

blank diameter for torispherical head

  • Thickness > 25mm/inch

blank diameter for torishperical head

  • Nominal rate

Nominal rates in case rate is given per month or quarter or half yearly

nominal rate in case rate is given monthly quarterly or half yearly

  • Annuity
  • Relation between total amount (S), payments (R) i.e., annuity

relation between total amount payment and annuity

  • Total amount of annuity, i.e., future worth of the accumulated amount (S)

total amount of annuity future worth of accumulated amount

  • Turnover ratio and investment ratio
  • Turnover ratio

turnover ratio

  • Investment ratio

investment ratio

  • Effective rate of interest

Effective rate of interest when interest rate is not defined on yearly basis

investment ratio

n = number of years

  • Total cost

Total cost = direct cost +fixed cost + overhead cost

  • Perpetuity

Perpetuity is a stream of identical cash flow with no end. Formula for determining present value of a perpetuity


  • Plant design and economics
  1. Flanges

    • a. Narrow faced flanges is the one where all the face contact area lies within (inside) the circle enclosed by the bolt holes.
      b. In calculation of flange stress, the load acting on flanges are to be calculated for opening as well as for bolting up conditions and difference of the two will be taken.

  2. Providing uniformly spaced internal or external stiffening rings may increase the rigidity of the cylindrical vessel subjected to internal or external pressure respectively.

  3. Expansion joints are provided in fixed tube heat exchanger to reduce thermal stress in shell and tubes.

  4. Unmortised cost = original value of equipment – total depreciation

  5. Capitalized cost is used for comparing alternative investment choices.

  6. A cylindrical shell under external pressure tends to buckle as a result of external radical pressure. The external pressure at which buckling occurs depends on modulus of elasticity, thickness of shell and diameter of the shell when length of shell is less than the critical length.

  7. Unamortized value is used for replacement decisions and capitalized cost considering other investment choices.

  8. Breakeven point occurs when total annual product cost equals total annual sales, cumulative cash flow is zero

  9. Discounted cash flow is used in reference to payout period.

  10. Torispherical head used for pressure less than 10 bar. Ellipsoidal head used for pressure greater than 10 bar. Hemispherical head is strongest head for given metal thickness. Pressure is divided across head. It is expensive in comparison to other two heads.

  11. Direct cost component of the fixed capital consists of onsite and offsite cost. Offsite cost is cost arising from a construction project that are spent in places other than construction site.

  12. A cylindrical storage tank can have a self-supported conical roof if its diameter is more than 50m.

  13. Whenever question asks to compare performance of an equipment before and after an MOC or investment, calculate capitalized cost to compare.

  14. Circumferential stiffening rings are used to withstand higher external pressure.

  15. Guy wire is used for external support.

  16. Direct cost component of fixed capital consists of onsite and offsite costs.

  17. A series of equal payments (e.g. deposits of cost) made at equal interval of time is known as annuity.

  18. Fixed capital investment or total capital investment is product of Lang multiplication factor and delivered equipment cost.