Contract build operate and transfer

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Investing in a hydropower plant with 5 MW power costs 3,500,000 euro . 1,300,000 euro will be invested by the investor while the rest of the World Bank loans with interest of 9 %.

Contract Build Operate and Transfer is ( 30 years ) with the Kosovo government . For operation Hydropower wage worker needed 10 80,000 EUR while maintenance costs are 2.5 % of total investment. Investor generates revenues that are 1.4 cents per 1 kw / h to KEDS sale . Income and expenses are increased for 10 % . Return on investment bonds Kosovo Government treasuries is 7 %. Corporate tax is 10 %.

Table 1: Return on investment of the project and return on investment in the hydropower market Return on investment of the project Return on investment in the hydropower market

Return on investment of the project

Return on investment in the hydropower market

0.0214

0.0295

0.0195

0.0514

-0.0165

0.0418

-0.0175

0.0389

0.0292

0.0285

0.0165

0.0196

0.0282

0.0319

-0.0192

0.0275

0.0469

0.0284

0.0315

0.0195

1. Find WACC?

2. Find NPV and IRR?

3. Develop sensitivity analysis if the difference between the scenarios is 15 %?

4. Develop a feasibility analysis for this project?

5. Develop stakeholder analysis (stakeholder analysis ) for this project?

6. Indicate who is responsible for issuing the relevant permits?

NOTE: Please do this exam with excel and use the formulas on the exam.

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We have prepared the capital budgeting problem by calculating the annual revenue, and analyzing the net present value of the project. We have also calculated IRR for the same. Further we have done sensitivity analysis. We have identified whether the project is viable or not through our calculations.

Reference no: EM131217117

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