HYDROGEN PEROXIDE REACTIFYING

Financial Feasibility Study

Cash flow analysis ANNEX-2

ANNEX-2: Cash Flow Projection, in USD (thousands)

Discount rate (i) = 8,0% Interest rate (i) = -2,1%
Total cost Cash Flow or Cumulative Cumulative Cumulative
Completion of Annual Capital (excl. Net Profit Net Cash Net Cash Discount Discounted Discounted Discount Discounted Discounted
years Investment Sales income Total cost Depreciation depreciation) Cash Income Allowances Net Profit Taxes After Taxes Income Inflows Factor Cash low Cash Flow Factor Cash low Cash Flow
A B C D E=C+D F=B+E G H=F-D I J=H-I K=A+D+G+J Ʃ(K) fd L=fd x K Ʃ(L) fd L=fd x K Ʃ(L)
1 (6.414) (6.414) (6.414) 0,926 (5.939) (5.939) 1,022 (6.553) (6.553)
Start-up
2 7.200 (7.873) 534 (7.339) (139) 0 (673) (673) (139) (6.553) 0,857 (119) (6.058) 1,044 (145) (6.698)
3 9.600 (9.856) 534 (9.321) 279 0 (256) (256) 279 (6.274) 0,794 221 (5.836) 1,066 298 (6.400)
4 9.600 (10.075) 534 (9.540) 60 0 (475) (475) 60 (6.214) 0,735 44 (5.792) 1,090 65 (6.335)
5 9.600 (9.664) 534 (9.129) 471 0 (64) (64) 471 (5.743) 0,681 320 (5.472) 1,113 524 (5.811)
6 9.600 (9.952) 534 (9.418) 182 0 (352) (352) 182 (5.561) 0,630 115 (5.357) 1,137 207 (5.604)
7 9.600 (9.473) 534 (8.939) 661 0 127 127 661 (4.900) 0,583 386 (4.972) 1,162 768 (4.836)
8 9.600 (9.596) 534 (9.062) 538 0 4 4 538 (4.362) 0,540 291 (4.681) 1,187 639 (4.197)
9 9.600 (9.303) 534 (8.769) 831 0 297 297 831 (3.530) 0,500 416 (4.265) 1,213 1.008 (3.189)
10 9.600 (9.632) 534 (9.097) 503 0 (32) (32) 503 (3.028) 0,463 233 (4.032) 1,239 623 (2.565)
11 9.600 (9.339) 534 (8.805) 795 0 261 261 795 (2.232) 0,429 341 (3.691) 1,266 1.006 (1.559)
12 9.600 (9.668) 534 (9.134) 466 0 (68) (15) (53) 481 (1.751) 0,397 191 (3.500) 1,293 622 (937)
13 9.600 (9.377) 534 (8.842) 758 0 223 49 174 709 (1.042) 0,368 261 (3.239) 1,321 937 0
Note:
Discount factor, fd = 1/(1+i)^n

Investment criteria - Advantages and disadvantages

No. Criterion Main advantages Main shortcoming
1. Investment Shows financial resources needed. No indication of project performance.
2. Net future worth Simple. When plotted as cash-flow diagram, shows timing of investment and income. Takes no account of the time value of money.
3. Pay back time Shows how soon investment will be recovered. No information of later years.
4. Net present worth As for net present worth but accounts for timing of cash flows. Dependent on discount rate used.
5. Rate of return Measures performance of capital Takes no account of timing of cash flows.
Dependent on definition of income (profit) and investment.
6. Discounted cash flow rate of return Measure performance of capital allowing for timing of cash flows. No indication of the resources needed
Sources: R.K. Sinnott, 1994, "Coulson & Richardson's Chemical Engineering", vol. 6, ed. 6th.
Published by Department of Chemical Engineering, University College of Swansea

Based on criterions as above, the author concludes no one best criterion on which to judge an investment opportunity.
Therefore, a compacy will usually develop its own method of economic evaluation, using techniques discussed in literature, and
will have a target figure of what to expect for the criterion used, based on their experience with previous successful, and
unsuccessful, projects.
HYDROGEN PEROXIDE REACTIFYING
Financial Feasibility Study
Net cash income ANNEX-3

ANNEX-3: Net Cash Income, in USD (thousands)

Annual Cash Flow or

Completion Capital Sales Total cost (excl. Cash Net Profit Net Cash
of years Investment income Total cost Depreciation depreciation) Income Allowances Net Profit Taxes After Taxes Income
A B C D E=C+D F=B+E G H=F-D I J=H-I K=A+D+G+J
1 (6.414) (6.414)
Start-up
2 7.200 (7.873) 534 (7.339) (139) - (673) - (673) (139)
3 9.600 (9.856) 534 (9.321) 279 - (256) - (256) 279
4 9.600 (10.075) 534 (9.540) 60 - (475) - (475) 60
5 9.600 (9.664) 534 (9.129) 471 - (64) - (64) 471
6 9.600 (9.952) 534 (9.418) 182 - (352) - (352) 182
7 9.600 (9.473) 534 (8.939) 661 - 127 - 127 661
8 9.600 (9.596) 534 (9.062) 538 - 4 - 4 538
9 9.600 (9.303) 534 (8.769) 831 - 297 - 297 831
10 9.600 (9.632) 534 (9.097) 503 - (32) - (32) 503
11 9.600 (9.339) 534 (8.805) 795 - 261 - 261 795
12 9.600 (9.668) 534 (9.134) 466 - (68) (15) (53) 481
13 9.600 (9.377) 534 (8.842) 758 - 223 49 174 709
HYDROGEN PEROXIDE REACTIFYING
Financial Feasibility Study
Net present value (NPV), Internal rate of return (IRR), and Payback time (PBT) ANNEX-4

in USD (thousands)
Discount rate (i) = 8,0% Interest rate (i) = -2,1%
Cash Flow or Cumulative Cumulative Cumulative
Completion of Net Cash Net Cash Discount Discounted Discounted Discount Discounted Discounted
years Income Inflows Factor Cash low Cash Flow Factor Cash low Cash Flow
K Ʃ(K) fd L=fd x K Ʃ(L) fd L=fd x K Ʃ(L)
1 (6.414) (6.414) 0,926 (5.939) (5.939) 1,022 (6.553) (6.553)
Start up
2 (139) (6.553) 0,857 (119) (6.058) 1,044 (145) (6.698)
3 279 (6.274) 0,794 221 (5.836) 1,066 298 (6.400)
4 60 (6.214) 0,735 44 (5.792) 1,090 65 (6.335)
5 471 (5.743) 0,681 320 (5.472) 1,113 524 (5.811)
6 182 (5.561) 0,630 115 (5.357) 1,137 207 (5.604)
7 661 (4.900) 0,583 386 (4.972) 1,162 768 (4.836)
8 538 (4.362) 0,540 291 (4.681) 1,187 639 (4.197)
9 831 (3.530) 0,500 416 (4.265) 1,213 1.008 (3.189)
10 503 (3.028) 0,463 233 (4.032) 1,239 623 (2.565)
11 795 (2.232) 0,429 341 (3.691) 1,266 1.006 (1.559)
12 481 (1.751) 0,397 191 (3.500) 1,293 622 (937)
13 709 (1.042) 0,368 261 (3.239) 1,321 937 0
Discount factor, fd = 1/(1+i)^n

Payback period formula:

a. If the cash inflows are even annually: F = P * (1+i)^n
Payback period = (Initial investment) / (Net cash flow per period). P = F * {1/(1+i)^n}
b. If the cash inflows are uneven annually: Where:
Payback period = A + (B/C) F = Future value
Where, P = Present value
- A is the last period number with a negative cumulative cash flow i = interest rate
- B is the absolute value (i.e. value without negative sign) of cumulative n = year-n
cash flow at the end of the period A.
- C is the total cash inflow during the period following period A.
HYDROGEN PEROXIDE REACTIFYING
Financial Feasibility Study
Profitability Index (PI) or Benefit to cost ratio and Break Even Point (BEP)

1. Profitability index (PI) or benefit to cost ratio (BCR): ANNEX-5 2. Break even point (BEP) ANNEX-6
Formula: Assumptions:
PI = (Present value of future cash inflows) / Initial investment - Yearly fixed cost (see column "K" in the table).
Note: - Selling price of product 400 USD/MTon (H2O2 50% conc.)
- Present value of future cash inflows exclusive initial investment. 800 USD/MTon (H2O2 100% conc.)
- Initial investment = initial cash outlay - Variable production cost 582 USD/MTon (H2O2 100% conc.)
- Future cash inflows = net cash income exclusie initial investment - Operating days 330 days per year

in USD (millions) BEP in unit

Discount rate = 8,0% Break Even Point
Present value Completion of Variable Selling price, BEP = FC / (P-V) % of design
Completion Annual Net cash Future cash Discount of future cash years Fixed cost, FC cost, V P capacity
of years investment income inflows Factor inflows USD USD/Mton USD/MTon MTPY MTPD %
A K K-A fd fd*(K-A) 1 Example:
1 (6.414) (6.414) Start-up At Y-3: Fixed cost, FC 2.871.770 USD
Start-up 2 2.635.417 582 800 12.088 36,63 100,7 Variable cost, V 582 USD/Mton
2 (139) (139) 0,857 (119) 3 2.871.770 582 800 13.172 39,92 109,8 Selling price, P 800 USD/Mton
3 279 279 0,794 221 4 3.091.112 582 800 14.178 42,96 118,2 BEP, unit = FC / (P - V) 13.172 MTPY
4 60 60 0,735 44 5 2.680.230 582 800 12.293 37,25 102,4 39,92 MTPD
5 471 471 0,681 320 6 2.968.436 582 800 13.615 41,26 113,5 109,8 % of des. capacity
6 182 182 0,630 115 7 2.489.642 582 800 11.419 34,60 95,2 Average: Fixed cost, FC 2.645.779 USD
7 661 661 0,583 386 8 2.612.244 582 800 11.982 36,31 99,8 Variable cost, V 582 USD/Mton
8 538 538 0,540 291 9 2.319.578 582 800 10.639 32,24 88,7 Selling price, P 800 USD/Mton
9 831 831 0,500 416 10 2.647.855 582 800 12.145 36,80 101,2 BEP, unit = FC / (P - V) 12.135 MTPY
10 503 503 0,463 233 11 2.355.701 582 800 10.805 32,74 90,0 36,77 MTPD
11 795 795 0,429 341 12 2.684.498 582 800 12.313 37,31 102,6 101,1 % of des. capacity
12 481 481 0,397 191 13 2.392.871 582 800 10.975 33,26 91,5
13 709 709 0,368 261 Average 2.645.779 582 800 12.135 36,77 101,1
Total (6.414) (1.042) 5.371 2.818
BEP in price per unit
Profitability index, PI = Ʃ{fd*(K-A)} / Ʃ{(-1)*(A)} = Break Even Point
- Based on discounted cash flow method 0,44 Completion of Variable Sales BEP = V + (FC/SV)
- Based on undiscounted cash flow method 0,84 years Fixed cost, FC cost, V volume, SV
USD USD/Mton Mton USD/Mton (50%) % of basis price
1 Example:
Start-up At Y-3: Fixed cost, FC 2.871.770 USD
2 2.635.417 582 9.000 437 109 Variable cost, V 581,979 USD/Mton
3 2.871.770 582 12.000 411 103 Sales volume, SV 12.000 MTPY
4 3.091.112 582 12.000 420 105 BEP, price = V + (FC/SV) 821 USD/Mton (100% conc.)
5 2.680.230 582 12.000 403 101 411 USD/Mton (50% conc.)
6 2.968.436 582 12.000 415 104 Average Fixed cost, FC 2.645.779 USD
7 2.489.642 582 12.000 395 99 Variable cost, V 581,979 USD/Mton
8 2.612.244 582 12.000 400 100 Sales volume, SV 11.750 MTPY
9 2.319.578 582 12.000 388 97 BEP, price = V + (FC/SV) 404 USD/Mton (50% conc.)
10 2.647.855 582 12.000 401 100 101 % of basis price
11 2.355.701 582 12.000 389 97
12 2.684.498 582 12.000 403 101
13 2.392.871 582 12.000 391 98
Average 2.645.779 582 11.750 404 101