Internal Rate Of Return Research Articles

Technical and economic feasibility of hybrid power generation from urban solid waste associated with solar energy, considering the impact of the sale of carbon credits

In the global context of energy transition, from a model dependent on fossil fuels to a low-carbon matrix, hybrid plants, those that combine more than one energy source, prove to be an effective strategy for the increasing of the use of renewable energy sources. Furthermore, the creation of instruments that consider the environmental benefits of energy sources, such as the carbon credit market, which allows the trading of avoided CO2 emissions in the energy generation process, can contribute to the economic viability of low emission sources. In this sense, the objective of this research was to analyze the technical and economic feasibility of hybrid generation from municipal solid waste (MSW) associated with photovoltaic energy, to meet the demands of small city councils in Brazil, considering the commercialization of carbon credits. The economic indicators Net Present Value (NPV), Internal Rate of Return (IRR), Capital Payback Time (PAYBACK) and Levelized Cost of Energy (LCOE) were calculated for four different MSW management scenarios of the Intermunicipal Consortium of Municipalities of the Alto Sapucaí for Sanitary Landfill (CIMASAS, in portuguese), considering different percentages of recycling of dry and organic materials. The generation modalities Self-Production (APE, in portuguese) and Mini and Micro Distributed Generation (MMGD, in portuguese), provided for in the Brazilian regulatory framework, were considered. The results demonstrated that there are technical and economic viability in the proposed hybrid generation in all scenarios analyzed, and as the percentage of recovery of recyclable materials increases, there is an improvement in economic indicators. On average, in the APE modality, the NPV was 49.10 % higher than in MMGD, the IRR was 21.66 % higher, the payback was 51.68 % lower and the LCOE was 40.80 % lower than in MMGD. The inclusion of revenue from the sale of carbon credits promoted an average increase of 47.33 % in NPV, 24.09 % in IRR, and a decrease of, on average, 28.17 % in payback and 40.57 % in LCOE, in APE modality. In the MMGD modality, there was an average increase of 134.99 % in NPV, 39.46 % in IRR, and a decrease of, on average, 38.61 % in payback and 36.98 % in LCOE. These results demonstrate how the incorporation of environmental valuation in energy generation can contribute to increasing the economic attractiveness of hybrid generation from renewable sources.

A sustainable floating dome biogas plants integrated with semi-transparent photovoltaic thermal collectors: Construction, production and economic analysis

The design and construction of a self-sustained solar photo-voltaic active thermal heating floating dome biogas plant (35 m3) offers an alternative solution for round year biogas production, managing food and agricultural waste, reducing greenhouse gas emissions and minimize pollution. Moreover, this proposed model addresses the challenge of achieving the desired operating temperature (35 ± 2 °C) specially during the cold climatic conditions, which often leads to low gas production and high hydraulic retention time in anaerobic digestion. The integration of solar modules with the biogas digester enables the utilization of thermal energy for slurry heating and electricity for force mode of operation, ultimately enhancing overall energy efficiency. However, to assess the performance of the system, proximate and ultimate analyses as well as a cost-benefit analysis were carried out, considering revenue, and costs associated with construction, operation, and maintenance. The plant produces a significant amount of gas (9–12 m3) and hot water (∼2000 L) replacing approximately one LPG cylinder/2 day as well as organic fertilizer. The economic analysis shows a positive net present value (19.5 lakhs), an internal rate of return (20%), and short discounted payback period (5.7 years). This highlights the economic feasibility of the proposed model and emphasizes the importance of considering economic factors in the design and implementation of sustainable energy solutions. Furthermore, this approach demonstrates the potential for sustainable development and the transition to cleaner and more efficient energy systems by integrating renewable energy generation, waste management, and cost reductions.

Investment Analysis for Monetization of Marginal Oil Reserves: An Alpha Field Joint Operation Case Study

Challenges and opportunities are faced in the development of marginal oil reserves that are often uneconomical to exploit conventionally. The main objective of this study was to determine whether the project is a viable investment based on the given assumptions, as well as whether the potential returns can justify the risks associated with marginal oil reserves. The research method involved the use of key financial metrics such as Net Present Value, Internal Rate of Return, and Payback Period, using a discount rate of 10%, which is standard in the oil and gas industry. The results show that the project has a positive NPV of USD 124,462.38, an IRR of 13.13%, and a PBP of 4 years and 5 months. These results indicate that the project is financially viable, with returns exceeding the capital cost of the project. Further sensitivity analysis identified that oil prices and production levels are the most critical factors affecting the financial outcome of the project. Compared to the WACC of 10.25%, the IRR of 13.13% indicates that the project exceeds the minimum required rate of return, thus justifying the investment. The implications of this study highlight the importance of proper operational management and market risk mitigation to maintain profitability.

Valorization of food waste into hydrogen energy through supercritical water gasification: Generation potential and techno-econo-environmental feasibility assessment

Food waste (FW) is a significant portion of the solid waste produced by cities, and it has become a global problem due to the poor management of food distribution and consumption. The improper disposal of FW in landfills precipitates pervasive global environmental predicamentsHowever, effective management strategies have the potential to convert this large amount of garbage into a very effective renewable energy source, particularly through the generation of environmentally friendly hydrogen. This study examines the capacity for energy generation and the practicality of hydrogen production in Bangladesh using supercritical water gasification technology. The findings indicate that approximately 489 MW of electricity can be extracted from approximately 23 million tons (Mt) of FW in 2023, with a projected escalation to around 2042 MW by 2042, coinciding with an anticipated surge in FW generation to approximately 110 Mt. Moreover, the study delves into the economic feasibility of these gasification endeavors, employing diverse metrics encompassing total life cycle cost, net present value, investment payback duration, levelized cost of energy, and internal rate of return. Technoeconomic analyses divulge an investment with a net present value of 11,669.4 M$M$, an 11-year payback period, and an internal rate of return of 14 %. In addition, the research assesses the technological, economic, and environmental viability inherent in the establishment of gasification-based electricity-generating facilities in Bangladesh's preeminent eight cities by 2023. This examination postulates that a transition from coal-based power plants to those powered by food waste would precipitate an annual reduction of 3.59 Mt in carbon dioxide emissions.

Economic evaluation of a wind and solar energy hybrid electric sightseeing boat in Laemsak, Krabi Province, Thailand

This research aims to analyze the economic evaluation of using hybrid wind and solar energy with a diesel-engine long-tail boat in the Laemsak tourism community, Krabi province, Thailand. It is a quantitative research study that collects and estimates the costs and expenses of developing hybrid wind turbine and solar panels with diesel-engine long-tail boat, including initial development costs, operational and maintenance costs, and depreciation costs, and also estimates the benefits of using the developed boat, such as revenue from boat services, fuel savings, and carbon offset savings. The economic feasibility is analyzed using the Cost-Benefit Analysis (CBA) method by calculating the Payback Period (PP), Net Present Value (NPV), Benefit Cost Ratio (BCR), and Internal Rate of Return (IRR), as well as analyzing the Sensitivity of some uncertain factors. The analysis of the project over a 10-year period indicates PP of approximately 3-4 years, positive NPV, BCR greater than 1.0, and IRR much higher than the Interest Rate. These figures demonstrate that the project is highly economically viable and suitable for investment.

A Farmer-Centric Cost–Benefit Analysis of Climate-Smart Agriculture in the Gandaki River Basin of Nepal

Climate-smart agriculture (CSA) is a climate-resilient practice that stands out globally as an important practice through which we can deal with emerging challenges through adaptation and mitigation to increase crop productivity and resilience. Despite its significance, a comprehensive cost–benefit analysis of the adoption of these practices has not yet been carried out. This study aims to bridge the knowledge gap between the cost and effectiveness of CSA practices adopted by small-scale farmers in growing rice, wheat and maize, the most staple crops in the Gandaki River Basin of Nepal. In this study, net present value (NPV), internal rate of return (IRR), benefit–cost (BC) ratio, net benefit investment (NK) ratio and payback period, along with the value of externalities (social and environmental), were employed to assess the profitability of CSA practices. The findings indicate that almost all the CSA practices analyzed were profitable, with the exception of solar water management in maize with very low IRR (6%) and a longer payback period. The outcome of this study offers valuable insights for farmers in choosing profitable CSA technology and for policy makers in promoting better CSA technology, upscaling CSA practices, and formulating new agricultural policies and programs in the context of the changing climate.

Supporting strategy for investment evaluation of photovoltaic power generation engineering projects using multi-criteria decision analysis methods

This scientific study examines the evaluation of photovoltaic power generation projects through the application of multi-criteria decision analysis methods. Two groups of large-scale grid-connected PV power generation system projects with a nominal power of 50 MW and 500 MW respectively were analyzed and evaluated. These systems were designed to be installed in the same wider geographical area in northern Greece, but they were differentiated in the part of the PV circuit. Twelve systems were analyzed in which either monocrystalline silicon panels or poly-crystalline silicon panels or bifacial photovoltaic panels were to be installed. In these systems either central photovoltaic inverters or photovoltaic string inverters were considered for installation. The following criteria were used to evaluate the investment in these projects. These criteria were related to the profitability, the financial cost, the technical level, and the electrical energy production of the systems and these were the initial investment cost, the operation and maintenance cost, the levelized cost of electricity, the net present value, the internal rate of return, the capital recovery or payback period, the technical level of the photovoltaic circuit, the technical maturity of the photovoltaic circuit, and the annual electricity production. The evaluation of these criteria was initially conducted with fixed weighting coefficients followed by a sensitivity analysis of these weighting coefficients. The results of the evaluation using the PROMETHEE, AHP and TOPSIS multi-criteria decision analysis methods showed that the PV power generation systems which should be preferred are those with increased nominal power, where monocrystalline silicon technology panels are employed following the central inverter topology.

Analisis dan Perancangan Usaha Pembukaan Cabang Baru pada Konveksi XYZ di Kota Bandung

Konveksi specific industry or agency. The problem with convection piling up and not making convection operational activities efficient. The aim of this study is to consider market aspects, technical aspects and financial aspects. By carrying out this feasibility analysis, convection can find out what needs to be prepared and know what risks will occur in order to avoid or minimize existing risks in the longer term. This financial aspect approach uses calculations of the Internal Rate of Return (IRR), Net Present Value (NPV), Payback Period (PBP), and Profitability Index (PI). The benefit of the proposed design results is that it can estimate the size of market demand for the opening of a new branch of XYZ Convection in Bandung City, namely 8,513 pcs in 2025, it can design the technical and operational aspects of opening a new branch of XYZ Convection in Bandung City by determining an investment of IDR 153,738,772, it can measure the financial feasibility of opening a new branch of Konveksi sensitivity of four variables, including sensitivity to decreasing demand levels, decreasing product selling prices, decreasing, increasing raw material costs, and increasing direct labor and indirect labor costs. Can identify the risks of opening a new branch of Konveksi XYZ in Bandung City with a percentage of 4.9%, and for entrepreneurs, it can be used as a consideration in making decisions in the business of opening a new branch of Konveksi. Based on the results of a feasibility study carried out taking into account market aspects, technical aspects and financial aspects, opening a new branch at XYZ Convection in Bandung City is feasible.

The Impact of ESG Policies of Enterprises on Internal Rate of Return

Environmental, Social, and Governance (ESG) is an investment strategy and corporate assessment framework that emphasizes the impact of enterprises on the environment, society, and governance. Its objective is to assess companies' performance and non-financial risks in relation to sustainable development. The internal rate of return (IRR) is the rate at which the project's cash flow is equal to zero. The objective of this study was to examine the correlation between an enterprise's ESG score and its IRR. This work utilizes quantitative analysis and multiple linear regression approaches, building upon earlier research that has examined the relationship between ESG factors and financial indicators. This research used Excel 2018 to do regression analysis on ESG and IRR, building upon the findings of prior studies. The research findings indicate a strong negative linear link between a company's IRR and its ESG rating, as well as its overall revenue growth rate. However, the total profit growth rate shows no significant correlation. Moreover, this study discovered that the overall rate of revenue growth has a more significant influence on the firm's IRR compared to the rate of ESG factors. This report presents a divergent finding from the bulk of other studies, offering a novel research avenue for examining the influence of ESG on financial performance.

Internal rates of return for public R&D from VECM estimates for 17 OECD Countries

Public R&D stimulates domestic private and foreign private and public R&D, together enhancing technical change and thereby GDP. In this paper, we evaluate vector-error-correction model (VECM) estimations and simulations of a companion paper in regard to internal rates of return (and related aspects) to additional public R&D of OECD countries and compare them to the macroeconomic literature. We show (i) internal rates of return to public R&D shocks, and (ii) the related payback periods, gain/GDP ratios, and sums of discounted (at 4%) gains. Fourteen of 17 countries show high internal rates of return, short payback periods, and high gains/GDP ratios from positive public R&D shocks if projects are stopped when gains get negative. Three countries show crowding-out effects and require (initial) reductions of public R&D before showing positive results.

STUDI KELAYAKAN USAHA INDUSTRI PEMINDANGAN IKAN DI LINGKUNGAN MAPAK BELATUNG KELURAHAN JEMPONG BARU KECAMATAN SEKARBELA KOTA MATARAM

The potential of fish in Indonesian waters has two seasons, the first is the fishing season which usually occurs between April and November, the lean season occurs between December and March. During the fishing season, fishermen can get catches that exceed the catch capacity for each time they go sailing. The Mapak Belatung Community is a coastal community where most of the population depends on marine products and aquatic animal cultivation, one of which is fish. This is what finally gave birth to fish smoking activities. Unsold fresh fish are processed into pindang fish by fisherwomen in a simple way and then marketed in traditional markets around Mataram City. The purpose of this study was to determine the feasibility of developing a fish smoking industry in the Mapak Belatung Environment, Sekar Bela District, Mataram City when viewed from the investment criteria of Net Present Value (NPV), Net Benefit Cost Ratio (Net B / C), Gross Benefit Cost Ratio (Gross B / C), Profitability Ratio (PR) and Internal Rate of Return (IRR). Based on the calculation of Net Present Value, it shows that the total NPV is Rp. 5,722,264, this means that the palm oil industry business at the research location is feasible to continue because the NPV result is positive (+). The calculation of Net B/C shows that the result is greater than 1 or 1.75, this means that the benefit obtained is 1.75 times the cost or expenses incurred. Based on the calculation of Gross Benefit Cost Ratio, it has a value greater than 1 (> 1), which is 1.233, meaning that the palm oil industry business at the research location is feasible to run, likewise the calculation result of Profitability ratio has a value greater than 1 (> 1), which is 1.97, meaning that the palm oil industry business at the research location is feasible to run. The Internal Rate of Return (IRR) of the palm oil industry at the research location has a value of 17.8 percent or greater than the applicable interest rate

Financial Feasibility Study of New Product Line Healthy Children Food Business: Case Study of Lil'bites

Based on data from the Indonesian Nutrition Status Survey (SSGI) in 2022, 21.6% of Indonesian children suffer from wasting 7.7%. A disorder known as "wasting" in children occurs when their weight falls till it is higher than what is considered normal for their age. For children's growth and well-being, they must consume enough fruits. Although fruits provide vital vitamins and minerals that boost immunity and general health, many kids dislike them because of their flavor, texture, or inexperience with new meals. Lil'Bites, a startup focusing on children's health, sees this opportunity to create kid-friendly fruit jams as a viable approach to ensuring kids consume enough fruits. This research aims to assess the financial feasibility of developing a new product line, which is a healthy jam for kids, using a quantitative approach, utilizing company data as primary data and data from similar companies as secondary data. The study will evaluate the payback period, net present value (NPV), and internal rate of return (IRR) and assess risk through sensitivity analysis. The results based on the base scenario indicate that the Lil'Bites new product line project is financially feasible, resulting in a payback period of 1.9 years, an NPV of IDR401,807,628, and an IRR of 54.94%, which is significantly higher than the WACC of 9.36%.

Optimizing Price Markup: The Impact of Power Purchase Agreements and Energy Production Uncertainty on the Economic Performance of Onshore and Offshore Wind Farms

Wind energy is rapidly expanding its capacity as part of the global energy transition. To ensure economic viability, wind energy projects increasingly rely on risk mitigation strategies. While Power Purchase Agreements (PPAs) manage spot market price variability, wind farms still face energy production uncertainty, directly impacting the quantity of energy generated. This study presents a comprehensive analysis of the price markup for onshore and offshore wind farms, considering energy production uncertainty under PPA and non-PPA scenarios. The study examines key metrics such as equilibrium prices, price markups, Internal Rate of Return (IRR), Net Present Value (NPV), and their correlation to energy production risk. Results demonstrate that PPAs significantly alter the relationship between price markup and variability. Offshore wind farms can potentially benefit more from PPAs compared to onshore, especially at lower levels of wind energy variability. However, as variability increases, the risk mitigation provided by PPAs diminishes, and both onshore and offshore wind farms may require higher price markups for financial viability. These findings highlight the necessity of carefully designed PPA structures and pricing strategies to ensure long-term competitiveness and sustainability of wind energy projects.

Examining the Impacts of Grid Tariff on the Economic Viability of Photovoltaic Energy: The Case of Residential Power Generation in Brazil

On-grid photovoltaic systems (PVs) hold immense potential as source of renewable energy, particularly in nations with abundant solar irradiation and large territories. Brazil, in particular, has emerged as a noteworthy example, driving an annual PV capacity installation rate above 150% since 2013. However, the recent Normative Resolution 1.059/2023, stablished by the National Electricity Energy Agency, has introduced grid tariff for utilizing grid infrastructure in Brazil. In light of this, our study aims to assess the impacts of this policy on the economic feasibility of medium-sized residential PVs (rooftops). Our finds demonstrated that the financial indicators for investing in on-grid PVs within medium-sized family homes in Brazil were very attractive prior to 2023, with an average Internal Return Rate (IRR) of 22.7% and a payback of 5.0 years. However, as consequence of the new policy these indicators will deteriorate and reach an average IRR of 15.7% and an average payback of 7.2 years, progressively until 2030. Additionally, it will increase almost 50% the PV electricity levelized cost. We recommend further research directions for policymakers and researchers encompassing several strategies for encouraging again the PV energy in the country, such as promoting joint procurement initiatives, and implementing subsidies for reducing photovoltaic system prices.

Effects of process parameters on biogas production from food waste using aspen plus simulator

This study explores the potential of converting food waste (FW) in South Africa to biogas via anaerobic digestion (AD) using the Aspen Plus Simulator version 11. The simulation modeled the AD process, focusing on hydrolysis, acidogenesis, acetogenesis, and methanogenesis stages, with unconverted substrate recycling at the acetogenesis stage, employing a Non-Random Two-Liquid (NRTL) model for the polar mixture components. The FW used contained 49.86 % volatile solids (VS) of carbohydrates, 39.31 % VS of proteins, and 10.83 % VS of lipids. The results revealed that biogas yield at mesophilic temperature (37 °C) was 50 % higher than at thermophilic temperature (55 °C) with a residence time of 35 days, and methane composition was 45.98 % higher. Methane and carbon dioxide percentage compositions increased with hydraulic retention time (HRT), varying between 37.5–45.5 % and 34.3–39.9 % at mesophilic conditions. Economic analysis indicated a profitable outlook, with a payout period of 3 years, 5 months, and a 15-year positive revenue forecast. The project exhibited an internal rate of return (IRR) of 59.6629 %, suggesting strong economic viability and potential for investment. This study underscores the potential for optimized AD processes to enhance biogas production from FW in South Africa, presenting a viable, eco-friendly waste management solution.

Capital Destruction—What is the Cost of Carbon-Neutrality in Shipping Competition?

Abstract The shipping sector must reduce its greenhouse gas emissions. Consumers demand green travel and transport services, but shipping is still to a large extent powered by fossil fuels. One of the key factors affecting the released emissions onboard the ship is the type of fuel utilized. Technological development is making new kinds of engines running with carbon-neutral fuels available. However, the new build and retrofit projects encountering the green transition have to be planned in detail. We analyze future cash flows of ropax ships operating with different types of fuel systems on an identical route. We base our findings on calculated asset values and internal rates of return. Based on our analysis of the given scenarios, the transition to carbon-neutral fuels comes with a cost for the shipping companies. In the forthcoming shipping competition, ships using fossil fuels will be more likely than their less polluting counterparts to be categorized as stranded assets.

FEASIBILITY ANALYSIS OF ORGANIC WASTE MANAGEMENT PROGRAM AT IPB UNIVERSITY, INDONESIA

More than half of the waste produced at IPB University is organic waste and is routinely generated every day. The waste could have economic value if it has proper management. On the other hand, waste management costs money for investment and operation. Therefore, a proper project plan is needed so the management can generate profits. This research aims to (1) estimate the potential of organic waste from IPB University that can be used optimally to produce economic value and (2) analyze the economic feasibility of organic waste at IPB University. The result of this research shows that the number of potential organic waste from IPB University that can give economic value is 506,496 kg each year. Economic value and feasibility were analyzed using three criteria, which are Net Present Value (NPV), Internal Rate of Return (IRR), and Net Benefit Cost Ratio (Net B/C). In economic analysis with a project life cycle of 20 years, the organic waste management obtained an NPV value of 915,056,415 rupiahs, 1.29 for Net B/C, and 10.35% for IRR. In financial analysis with a project life cycle of 20 years, the organic waste management obtained NPV value by -695,114,013 rupiahs, 0.78 for Net B/C, and 0.12%for IRR. Based on the description above, it can be concluded that the project IPB campus organic waste management is economically feasible but not feasible financially.

Benefits and costs of measures to tackle the outbreak of African swine fever in Sweden

A common rule in many countries for mitigating the damage caused by African swine fever (ASF) is to eradicate the virus at the outbreak in order to prevent its dispersal and the associated social costs of depopulating infected domestic pigs. The economic performance of this practice, as measured by five different evaluation criteria (net present value, benefit-cost ratio, rate of return, internal rate of return, and payback time), depends on the type of control cost and the spatial and dynamic allocation of benefits, i.e. avoided losses from infected domestic pig farms. The present paper calculates the direct and indirect costs of immediate control measures during an ASF outbreak in wild boars in Mid Sweden. The direct costs include expenses incurred for surveillance, laboratory tests, depopulation of wild boar etc., while the indirect costs are borne by firms and people in the area in relation to movement restrictions. The calculations showed that the total cost of control measures amounted to 28 million euros, with indirect costs making up 40% of this figure. The benefits were greatly dependent on the speed of ASF dispersal and assumptions about pig farmers’ investment responses, which implied large variations in each of the five evaluation criteria.

Pricing drinking water testing in northern Haiti: Financial sensitivity to operating costs, user demand, and economic conditions

Safe drinking water availability is a concern in Haiti. Public systems have limited coverage and reliability. Private wells and local water sources are often of unknown or poor quality. Public health events, such as the 2010 cholera outbreak, demonstrate vulnerability to water contamination. To address these concerns, a drinking water laboratory was established at the Campus Henri Christophe in Limonade, a branch of the State University of Haiti, to meet water testing demands from local clients such as for-profit kiosks, institutions, industries, and municipal water systems. This study assessed the financial viability of a university-based drinking water laboratory in Haiti by calculating Internal Rate of Return and Net Present Value. Sensitivity analysis was used to identify the range of conditions under which laboratory revenues would cover operating costs. To achieve an acceptable profitability level, the laboratory must perform microbiological testing for routine monitoring samples and test an average of five samples per day. Price-based incentives for new clients have relatively small impacts on profitability. Finally, international and Haitian inflation cause some variation in profitability. These economic factors will be among the key drivers of laboratory operation costs. The results underscore the main factors that must be considered to make the laboratory successful and the importance of strategic marketing for laboratory managers to encourage clients to regularly test drinking water and emphasize microbiological testing.

Analisis Studi Kelayakan Usaha Briket Limbah Tongkol Jagung

The use of energy resources that are not environmentally friendly is a problem in Indonesia today. Briquettes are also the primary material because they are abundant, and the primary material has yet to be optimally utilized, including corn cobs. The purpose of this study is to analyze the economic feasibility of corn cob waste briquettes in this study using data analysis of technological technical aspects, financial feasibility analysis such as Payback Period (PP), Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit and Cost Ratio (B/C). The results showed that it takes 19,800 kg of corn cobs to produce charcoal, as much as 3,168 kg and 158.4 kg with tapioca starch adhesive material, as much as 5% of the total weight of charcoal powder, requiring four pieces of equipment, namely pyrolyzer machines, Hammer mills, Planetary mixers, and Tray dryers. Furthermore, the feasibility analysis of this corn cob briquette business was declared feasible with the four categories: Payback Period (PP) for 3.1319 years, Net Present Value (NPV) of Rp 28,129,336,212; IRR of 17.77%, and Net B/C of 1.55. The corn cob briquette agro-industry will remain profitable even if the production capacity decreases by 28% from the original capacity. The agro-industry can also still operate despite an 8% decrease in the selling price of briquettes and will remain profitable if raw materials increase by 17%.