Question

The capital investment cost for a switchgrass-fueled ethanol plant with a capacity of 250,000 gallons per year is $2,000,000. The costcapacity factor for this particular plant technology is 0.67 for capacities ranging from 200,000 gallons per year to 500,000 gallons per year. What is the estimated capital investment for a similar ethanol plant with a capacity of 400,000 gallons per year? Please only fill in the number of your calculated result in the blank, e.g., if the result is $100, fill in "100"; also round to the nearest integer.

Answer 1

Answer:

$2,740,251.24

Explanation:

Applying power sizing technique or an exponential model to determine the cost of new boiler.

This model identify the cost variation along with change in capacity or power of the equipment.

$\frac{C_{A} }{C_{B} } =(\frac{S_{A}}{S_{B}})^{x}$

Where,

Cb = Cost of new plant

Sa = capacity of new plant

Sb = capacity of old plant

x = cost capacity factor

Therefore,

$\frac{C_{A}}{2,000,000} =(\frac{400,000}{250,000})^{0.67}$

$C_{A}=2,000,000\times\frac{400,000}{250,000}$

               = 2,000,000 × 1.3701

               = $2,740,251.24