1 Building a turbine farm years over 10 2 year construction, 8 years operation Construction is wholly financed by. drawing on $2.5 Bill Debt from lank. - Delt is paid during the operations Schedule (see financing delt) in the 8 years following construction. Interst rate is [0% during construction 11%. P/a durns years 1-4 of operation - 5/pa during last 4 stad. cost of equity = 1570p.a = 45% Tax rate
1 Building a turbine farm years over 10 2 year construction, 8 years operation Construction is wholly financed by. drawing on $2.5 Bill Debt from lank. - Delt is paid during the operations Schedule (see financing delt) in the 8 years following construction. Interst rate is [0% during construction 11%. P/a durns years 1-4 of operation - 5/pa during last 4 stad. cost of equity = 1570p.a = 45% Tax rate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Using the FCFE Model, Calculate the current equity value of this project. Show detailed workings
Transcribed Image Text:-
- Building a turbine farm
years
over 10
- 2 year construction, 8 years operations
Construction is wholly financed by.
drawing on $2.5 Bill Debt from bank.
- Debt is paid during the operations
Schedule (see financing delt) in
the 8 years following construction.
Interst rate is [0% during construction
11%p/a durs years
1-4 of operation
5/pa/ during last 4
Stevos.
cost of equity = 15%p.a
= 45%
Tax rate
Transcribed Image Text:Expected FCF
End of
year
FCF*
(millions)
End of
jeer
FCFF
(millions)
D()
(millions)
end of
Sear
2
D₂
(millions)
3
о
-1000-1500 0
78
Financing | Delt
end of
yeur
j
1000 2500 2100 1800
617
поо
100/900
4
500
2/3
6
9
1100 1100 1100 1100 600
5
800
8
9
600 300
10
415
1500
10
o
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