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Regarding the IRR, values of 33% and 40% for conventional and vacuum with no air drying were obtained respectively for Plant C. It can be said that the two scenarios are economically feasible at a discount rate of 15%. When the NPV is positive, the IRR will be greater than the discount rate; while when the NPV is negative it will be less than the discount rate (Lang and Merino 1993). Vacuum with no air drying obtained a higher IRR, which means that it is more viable than conventional drying. The IRR for vacuum with air drying was negative, due to the negative NPV, which indicates that this scenario is not feasible. 5.2 PLANT D FEASIBILITY ANALYSIS A feasibility analysis was also conducted for Plant D. A cash flow analysis was created for the same scenarios mentioned in Plant C analysis (section 5.1). The net cash flows for the three scenarios were obtained from the cash flow statement. It can be seen in Table 21 and 23 that for the three scenarios (conventional, vacuum with air drying, vacuum with no air drying) the net cash flow value at the year “0” was negative, and as the period of years increased, the net cash flows turned into positive values. This behavior can be explained by Rodgers (2011) who established that after a company is starting up, the firm goes into a growth phase, where the operating activities gain improvement and which is shown by positive net profits. However, the company’s investing activities will still show a negative cash flow because the firm is still adding capacity and consuming external capital. Then, once the company is finally established or matured, the cash flow will be positive, reflecting the operating activities. A similar behavior, as described by Rodgers (2011), can be seen in table 21 and 23. After year 1, profit growth can be seen, which means that some of the debt and dividends are being paid off. After the cash flow was computed, the net present value and the internal rate of return were calculated by using the values obtained from the net cash flow analysis. Then, the values between the three scenarios were compared to determine which scenario was best. Results are presented in Tables 21, 22, and 23. 89PDF Image | Impact of Vacuum-Drying on Efficiency of Hardwood Products
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