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Estimating The Life Cycle Cost and Sensitivity analysis of Palm
Biodiesel Production in Malaysia
Nur Aisyah Binti Abd Rahman
Supervisor: Dr. Che Mohd Imran Bin Che Taib
Bachelor of Science (Financial Mathematics)
School of Informatics and Applied Mathematics
Biodiesel fuel gains more interest as alternative fuel due to the environmental pollution
and diminishing supply of fossil fuel. The investor of biodiesel fuel used the life cycle cost
and payback period to help them for determining the profitability of investment. This
study aims to calculate the life-cycle cost and payback period for a palm biodiesel
production in Malaysia. It also investigates the sensitivity of the life cycle cost in different
values of capital cost, operating cost, biodiesel conversion efficiency, interest rate and
crude palm oil (CPO) price. Besides, this project used present value factor to develop the
life cycle cost model and payback period method. As a result, biodiesel production for
operating cost of 20 years shows profitability in investment based on the assumptions for
the values of certain variables. Hence, the variation in CPO price is more sensitive to the
life cycle cost compared to other variables.
852 | UMT UNDERGRADUATE RESEARCH DAY 2018