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Economic Evaluation
Published in Graeme Dandy, Trevor Daniell, Bernadette Foley, Robert Warner, Planning & Design of Engineering Systems, 2018
Graeme Dandy, Trevor Daniell, Bernadette Foley, Robert Warner
The correct concept for the discount rate is the opportunity cost of capital. The opportunity cost of capital for a particular company or individual at a particular point in time is the highest rate of return that it could obtain by having extra capital available. Obviously this depends on the investment opportunities at that time. Most companies raise their capital by a combination of borrowing from financial institutions (called debt capital) and reinvesting some of the company profits or retained earnings (called equity capital). In this case the opportunity cost of capital is a weighted average of the interest rate paid on debt capital and the rate of return that the shareholders could obtain by investing their capital to the best advantage elsewhere. This usually results in a higher rate than the interest paid on debt capital.
Engineering entrepreneurship
Published in Riadh Habash, Green Engineering, 2017
There are many risks an entrepreneur and an investor in an entrepreneurial venture are faced with. Do they have the means not just to start the company, but also develop the company? A main source of risk is technology risk. To the extent that company employs technology, there are obviously issues of its leading edge, intellectual property, and the product risk. If a product is not developed yet, can it be produced? Will it function? Another risk is associated with the industry and availability of supply. Moreover, there are financial risks including raising the initial money to carry out the task and possibility to raise the follow-up money. All the above matters are under the notion of investor risk. The market size and the length of the opportunity window are the initial bases for determining the risks and rewards. The risks reflect the market, competition, technology, and amount of capital engaged.
Commercialization of the biochar industry
Published in Johannes Lehmann, Stephen Joseph, Biochar for Environmental Management, 2015
Michael Sesko, David Shearer, Gregory Stangl
Capital, in its many shapes and sizes, allows companies to develop products and services to meet market demands. A majority of the different value chain links described above cannot be commercialized without capital. The exception lies in companies that are not capital intensive that can bootstrap their commercialization path with internal funds or profits. This can be a long and arduous road but potentially very lucrative for the company that can afford to start small and grow organically. For those companies that do not have that option, raising capital can be a critical tool in the path to commercialization. But not all capital is the same, nor are the cash flows that the enterprise creates. The authors postulate that one of the reasons the nascent biochar industry has struggled to raise significant financing to date is because of a misalignment of capital and risk. It is therefore in the biochar company’s best interest to align cash flow expectations and their respective risk profile with the preferences of their potential investors. This will both increase the likelihood that the company gets funded and, in some cases, will lower the cost of capital for the firm.
Technical, economic, and environmental assessment of flare gas recovery system: a case study
Published in Energy Sources, Part A: Recovery, Utilization, and Environmental Effects, 2020
Seyed Morteza Mousavi, Kamran Lari, Gholamreza Salehi, Masoud Torabi Azad
The gas produced by the refinery is mainly based on the feed from two gas fields. As required, it can be injected into oilfields for recovery enhancement with a 42-inch 328-km-long pipeline to National Iranian South Oil Company or by 30-inch 26-km-long pipelines and 16-inch 25-km-long pipelines to the gas pipelines No. 3 (IGATIII) and 2 (IGATII) for general consumption. Also, the produced condensate is transferred by 8-inch 153-km-long pipelines to the Fajr gas refinery and then to Taheri Port for export or by 8-inch 220-km-long pipeline or by tanker to Shiraz Refinery. HYSYS, Aspen and Thermo flow software are used to simulate all of the three methods to determine the new conditions. Therefore, the methods are compared by the use of IRR, NPV, and PBP to find the best method. Net present value (NPV) is a method to determine the current value of all future cash flows generated by a project, including the initial capital investment. Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment that equals zero. Internal rate of return is used to assess a project or investment to see whether it is desirable. In order to determine the time needed to recoup the initial investment on a project, the payback period formula is applied. It is also used for quick calculations, yet it is not generally considered as an ultimate evaluation to see whether to invest in a particular situation.
Back-shoring or re-shoring: determinants of manufacturing offshoring from emerging to least developing countries (LDCs)
Published in International Journal of Logistics Research and Applications, 2019
Muhammad Mohiuddin, MD. Mamunur Rashid, MD. Samim Al Azad, Zhan Su
Capital investment refers to the degree to which a firm invests in a manufacturing plant to purchase land, machinery, and buildings to produce goods and services. Capital investment serves as a proxy measure for the extent to which offshoring positively affects reductions in operating costs. By outsourcing non-core activities, firms can save costs associated with capital investment to some degree, allowing the investment fund to be diverted to core business activities, thus improving specialisation (Claver et al. 2002; Lau and Zhang 2006). The leftover money in the investment fund could then be used to perform research and development and develop new products and market segments. H1a) There exists an inverse relationship between capital investment and the extent to which a manufacturing firm engages in offshore outsourcing.
Techno-institutional models for managing water quality in rural areas: case studies from Andhra Pradesh, India
Published in International Journal of Water Resources Development, 2018
The Naandi Foundation’s institutional model is close to a business model, where the contributions of the community are limited. Most of the capital is raised through its own investments or bank loans. It was reported that the foundation also uses public funds, like Member of Parliament or Member of Legislative Assembly funds, as initial capital for setting up the plants. In each village, the Naandi Foundation enters into a tripartite agreement with the gram panchayat and the technology provider, Water Health India (Table 7). The duration of this agreement varies from village to village (five to eight years in the sample villages); some of the presidents were found to be not familiar with or aware of this agreement. Naandi Foundation or Water Health India staff maintain the plants. The foundation is also actively involved in awareness building and promotional activities. Water is sold in 12- and 20-litre cans for USD 0.022 and USD 0.033, respectively. The money is deposited at Naandi Foundation headquarters or collected by Water Health India every week.