Capital Budgeting : investment Decision
CAPITAL BUDGETING – INVESTMENT DECISIONS
SUBMITTED BY :
Abhisht Sinha (08305)
Himangi Malik (08321)
Swagata Ghoshal (08337)
Tijeel Kumar Tarun (08352
I. CASE ABOUT BUILT OPERATE AND TRANSFER
The case taken is about Built Operate and Transfer. It is a feasibility report which was prepared to present economic analysis carried out on the project and contain result of economic evaluation of the project so that the owner can take investment decision and the project can be properly planned and implemented.
Financial analysis is useful for every business entity to enhance their performance, competitive strength and access their financial stability and profitability of the firm. It is used to analyse whether an entity is stable, solvent, liquid, or profitable enough to be invested in. The result of this analysis shows the preferred solution which financially feasible and viable and economically justified.
1. BASIC PARAMETERS FOR FINANCIAL ANALYSIS
a. Project Cost
Total cost of project is Rs. 880 Cr and their breakup is given below: PARTICULARS
AMOUNT (RS. CR)
EPC and Directly related Costs
727.85
Preliminary & Pre-operative Expenses
39.76
Interest During Construction
76.08
Interest upto first annuity payment date
36.30
Total Project Cost
880.00
The first annuity payment would be made 6 months after the scheduled project completion date, a provision for funding the first six months of interest cost has been made as part of the Project Cost.
b. Means of Finance
MEANS OF FINANCE
AMOUNT(RS.CR)
Government Grant
141.55
Equity/Quasi equity
78.45
Debt
660.00
Total Project Cost
880.00
Major source of finance is government grants and term loans. They tried to maintain debt-equity ratio to be 3:1.
c. Financial Data From Concession Agreement Net project cost = 738.45 crores
Discounting factor – 12%
Debt-Equity Ratio – 3:1
Subsidy – 20% of the bid project cost
Annuity Payments – 69.30 crores, semi annually
Total Project cost
SUBMITTED BY :
Abhisht Sinha (08305)
Himangi Malik (08321)
Swagata Ghoshal (08337)
Tijeel Kumar Tarun (08352
I. CASE ABOUT BUILT OPERATE AND TRANSFER
The case taken is about Built Operate and Transfer. It is a feasibility report which was prepared to present economic analysis carried out on the project and contain result of economic evaluation of the project so that the owner can take investment decision and the project can be properly planned and implemented.
Financial analysis is useful for every business entity to enhance their performance, competitive strength and access their financial stability and profitability of the firm. It is used to analyse whether an entity is stable, solvent, liquid, or profitable enough to be invested in. The result of this analysis shows the preferred solution which financially feasible and viable and economically justified.
1. BASIC PARAMETERS FOR FINANCIAL ANALYSIS
a. Project Cost
Total cost of project is Rs. 880 Cr and their breakup is given below: PARTICULARS
AMOUNT (RS. CR)
EPC and Directly related Costs
727.85
Preliminary & Pre-operative Expenses
39.76
Interest During Construction
76.08
Interest upto first annuity payment date
36.30
Total Project Cost
880.00
The first annuity payment would be made 6 months after the scheduled project completion date, a provision for funding the first six months of interest cost has been made as part of the Project Cost.
b. Means of Finance
MEANS OF FINANCE
AMOUNT(RS.CR)
Government Grant
141.55
Equity/Quasi equity
78.45
Debt
660.00
Total Project Cost
880.00
Major source of finance is government grants and term loans. They tried to maintain debt-equity ratio to be 3:1.
c. Financial Data From Concession Agreement Net project cost = 738.45 crores
Discounting factor – 12%
Debt-Equity Ratio – 3:1
Subsidy – 20% of the bid project cost
Annuity Payments – 69.30 crores, semi annually
Total Project cost