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    Group4 Calpine Case

    Uploaded by

    Vikas Tiwari
    This document calculates the weighted average cost of capital (WACC) as 5.74% for an investment project. It then provides a discounted cash flow analysis of the project over a 10 year period, showing annual cash inflows and a terminal value, resulting in a positive net present value of $748,368,000. Therefore, this is a positive NPV project that is considered attractive for investment.

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    Group4 Calpine Case

    Uploaded by

    Vikas Tiwari
    327 views3 pages
    This document calculates the weighted average cost of capital (WACC) as 5.74% for an investment project. It then provides a discounted cash flow analysis of the project over a 10 year period, showing annual cash inflows and a terminal value, resulting in a positive net present value of $748,368,000. Therefore, this is a positive NPV project that is considered attractive for investment.

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    Project Finance

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    This document calculates the weighted average cost of capital (WACC) as 5.74% for an investment project. It then provides a discounted cash flow analysis of the project over a 10 year period, showing annual cash inflows and a terminal value, resulting in a positive net present value of $748,368,000. Therefore, this is a positive NPV project that is considered attractive for investment.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    327 views3 pages

    Group4 Calpine Case

    Uploaded by

    Vikas Tiwari
    This document calculates the weighted average cost of capital (WACC) as 5.74% for an investment project. It then provides a discounted cash flow analysis of the project over a 10 year period, showing annual cash inflows and a terminal value, resulting in a positive net present value of $748,368,000. Therefore, this is a positive NPV project that is considered attractive for investment.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 3

    WACC Calculation

    D/V
    Kd
    t
    E/V
    Rf
    (Rm-Rf)
    beta
    Ke
    WACC
    Inflation rate

    79%
    7.75%
    38%
    21%
    5.66%
    6%
    0.60
    9.26%
    5.74%
    2%

    Exhibit (3a) as per 31/3/99


    Exhibit 5
    Exhibit 5
    Exhibit (3a) as per 31/3/99
    Exhibit 6a (10 yr US treasury bill)
    Exhibit 6a

    in ($000)
    Year 1
    Year 2
    Year 3
    Capex
    $
    250,000 $
    250,000
    Cash Inflows
    $
    60,102
    Terminal Value
    $
    1,305,679
    NPV
    $
    748,368
    *Terminal value was calculated using annuity of 30 years, assuming plant life of 30 years as plant is d
    *Capex of $500mn is given in two years, we assumed it $250mn every year.

    So this is a positive NPV project a

    Annual Cash flow calculations for


    CCGT plant ($000)
    Gross Profit
    70,057
    Exhibit 5
    Tax (@38%)
    -26621.66
    EBIAT
    43,435.34
    Depriciation
    16667
    Exhibit 5
    Capex
    0
    Assumed
    Delta NWC
    0
    Assumed
    FCFF
    60,102.34

    Year 4
    $

    61,304

    Year 5
    $

    62,530 $

    Year 6
    63,781 $

    of 30 years as plant is depreciable for 30 years.


    ear.

    positive NPV project and hence attractive.

    Year 7
    65,057 $

    Year 8
    66,358 $

    Year 9
    67,685

    Year 10
    $

    69,039

    1234795

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