Cost components and typical percentages: Identify the wrong statement about annual percentages used in chemical plant cost estimates.

Introduction / Context:Heuristic percentages are widely used for quick cost appraisals. Recognizing which rules are reasonable and which are unrealistic prevents large estimation errors in feasibility studies.

Given Data / Assumptions:

• Percents refer to typical annualized benchmarks.
• Values are order-of-magnitude guides, not exact for every plant.

Concept / Approach:Typical guides suggest single-digit insurance, low single-digit building depreciation, and equipment depreciation near 10% per year (assuming ~10-year straight-line life). However, R&D as 15% of NSR is far too high for most chemical plants; it is usually much lower (often < 5%, commonly 1–3% for many commodity operations).

Step-by-Step Solution:Evaluate each statement against common heuristics.(a) 10% equipment depreciation: reasonable order-of-magnitude.(b) Buildings at ~3%: plausible.(c) Insurance ≈1% of FCI: plausible.(d) R&D = 15% of NSR: unrealistically high for chemical plants.

Verification / Alternative check:Industry summaries typically place R&D for process industries in low single digits of sales, much less than 15%.

Why Other Options Are Wrong:The other percentages are reasonable heuristics for early estimates; exact values depend on asset lives and insurance markets.

Common Pitfalls:Assuming high-tech or pharma R&D percentages apply to commodity chemicals; they do not.

Final Answer:Research and development costs are about 15% of net sales realisation (NSR).