During the past four decades, the project finance (PF) has emerged as an important method of financing large-scale, long-term, high-risk domestic and international industrial ventures, based upon the projected cash flows of the project rather than the balance sheets of its sponsors. This is usually defined as limited or nonrecourse financing of a new project to be developed through the special purpose vehicle (SPV). It involves a number of the equity investors (sponsors), as well as a syndicate of banks or other lending institutions that provide loans to the operation. The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a lien on all of these assets and are able to assume control of a project if the project company has difficulties complying with the loan terms.

Generally, the SPV is created for each project, thereby shielding other assets owned by a project sponsor from the detrimental effects of a project failure. As a special purpose entity, the project company has no assets other than the project. Capital contribution commitments by the owners of the project company, are sometimes necessary to ensure that the project is financially sound or to assure the lenders of the sponsors’ commitment. The project finance is often more complicated than alternative financing methods. Traditionally, the project financing has been most commonly used in the extractive (mining), transportation, telecommunications industries as well as sports and entertainment venues.

Table of contents

Chapter 1 – Overview of Project Finance
1.1.Definition of Project Finance
1.2.Forms of Project Finance
1.3.Project Finance and Other Sources of Financing
1.4.Historical Perspective and Development of Project Finance
1.5.Project Finance versus Corporate Finance
1.6.Stages in Project Finance
1.7.SPV and Transactional Stakeholders

Chapter 2 – Global Project Finance Market
2.1.Project Finance – Statistics based on Dealogic
2.2.How Does Project Finance In Emerging Markets Differ From Developed Countries?
2.3.What Makes Project Finance Particularly Suitable To Emerging Markets?
2.4.Project Finance Investments post the Financial Crisis
2.5.Recent Trends in Project Finance
2.6.PPI in Europe
2.7.PPI in Poland

Chapter 3 – Risk Management in Project Finance
3.1.Risk Identification
3.2.Risk Allocation

Chapter 4 – Financial Statements of Project
4.1.Accounting Principles
4.2 Financial Statements
4.2.1.Income Statement
4.2.2.Balance Sheet
4.2.3.Cash Flow Statement
4.3 Relationship Between the Financial Statements and the Project Cash Flows
4.4.Case Study
4.4.1.Project Financials
4.4.2.Income Statement
4.4.3.Cash Flow Statement
4.4.4.Balance Sheet

Chapter 5 – Cost of Capital
5.1.Cost of Capital – Introduction
5.2.Cost of Equity
5.2.1 Calculating the Cost of Equity from the CAPM
5.2.2 Calculating the Cost of Equity from the Growth Model
5.3 Interest Rates and the Cost of Debt
5.4 Weighted Average Cost of Capital
5.5 Entity Versus Equity Basis

Chapter 6 – Methods of Investment Appraisal
6.1.Creating Value for the Investor
6.2.Non-Discounted Cash Flow Methods
6.2.1.Payback Period
6.2.2.Return on Investment
6.3. Discounted Cash Flow Methods
6.3.1.Net Present Value
6.3.2.Profitability Index
6.3.3.Internal Rate of Return
6.3.4 Modified Internal Rate of Return
6.3.5. Discounted Payback Period
6.4. Comparison Between Discounted Cash Flow Methods
6.4.1 Relative and Absolute Measures
6.4.2 Agreement and Conflict Between Measures
6.5. Sensitivity Analysis
6.6. Scenario Analysis
Annex: Excel’s functions in Investment Appraisal
Glossary of Terms

książka Project Finance with Excel. A Basic Approach

Publication details

Project Finance with Excel. A Basic Approach

  • Author: M.Panfil
  • Publisher: Warsaw School of Economics
  • Year: 2015
  • Pages: 1-133
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