We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Project Finance - Assignment Example

Comments (0)
One - Chapter 1: Overview of project Project Finance Assignment Funding investments using project finance Project financing has increasingly been used to fund investments because of the increasing demand for cheap energy and mineral resources by the developed economies…
Download full paper
Project Finance
Read TextPreview

Extract of sample
Project Finance

Download file to see previous pages... Unlike project finance which is considered a non-recourse option, the conventional source of funding for long term investments greatly depended on cash flows. Primarily, the classic lending principally depended on the credit rating of the borrower, since the company assets were used as security for the lending. However, due to the size of the project finance operation, the balance sheets of the participating company may be overshadowed, considering the possible lack of credit history by the special purpose vehicle that acts as the borrowing entity. Additionally, project financing has increasingly been used to fund investments as a non-recourse alternative because for an individual project, the debtor’s liabilities will not be remedied using the project sponsor’s assets. Instead of relying on the creditworthiness of the project sponsor, credit assessment is based on the expected cash flows of the project. The project sponsor is therefore relieved from any interest payments or liability associated with servicing of the project. Similarly, a limited recourse in project financing implies that certain responsibilities and obligations of the project sponsor are incapacitated. ...
Although the US corporations recorded a lower use of project finance compared to the foreign counterparts, the $34 billion investment in 2004 surpassed the $25 billion that was invested in new businesses by venture capitalists, and was half the $73 billion raised by stock listed companies via IPOs. From the study, project financed corporation investments were only 19% of the US corporations while 53% of international firms were project financed. Therefore, project finance has a 50% chance, and growing, over traditional corporate finance. The major short-comings of project finance First, the numerous participants involved in project financing have each a specific interest in mind. The complexity of the transactions results in conflicts of interest during risk diversification; lengthy negotiations and escalating costs for compensating parties that have accepted risks. Secondly, higher prices result because of the limited channels of enhancing credit risk to acceptable levels by banks. Consequently, increases in costs for due diligence services by consultants, engineers and lawyers are impacted by the increases in cost of credit. Thirdly, the complexity of the transaction structure and the lengthy documentation causes an increase in the interest on project financings channeled to a project sponsor compared to direct loans of equal magnitude. These costs accrue from the time spent during the evaluation of the project and documentation by the technical experts, lenders and lawyers employed by the project sponsor; cost of insurance cover against country risk; costs of employing technical professionals to oversee the project and adherence to the financing agreement; and costs of compensating lenders and third parties for accepting risk. The fourth disadvantage of project ...Download file to see next pagesRead More
Comments (0)
Click to create a comment
After the stock dividend (all other things remaining unchanged) the earning per share will: a) Remain the same b) Increase by 5 percent c) Increase by 20 percent d) Decrease by 5 percent e) There is not enough information given here to be able to answer this question.
7 Pages(1750 words)Assignment
Finance for Manager (Finance)
Smith – Brown in West Yorkshire – Jool’s Furniture Industries Ltd. The main purpose of this report is to identify and analyse the current position of the company and to develop possible solutions that the company can adopt to improve the current position.
20 Pages(5000 words)Assignment
However, it cannot be used for specific projects because each project has it own operating risk. b) Book weights should be used to calculate WACC because the market value is subjective and changes regularly. c) Current (marginal) cost rates should be used because WACC is used mainly to make investment decisions and these decisions depend on expected future cash flow from projects in relation to the cost of new capital.
2 Pages(500 words)Assignment
Finance Project
The project aims to find the feasibility of the project after a critical financial analysis. The risk inherent to implementation of the project is also being considered and the impact of the risk on the facility to be generated is also considered. The final decision underlying the acceptability of the project is considered after taking all the factors in consideration.
5 Pages(1250 words)Essay
Business Finance Assignment
Most banks have cut down their lending rates by up to 25%, with some going as high as 30% against their former lending portfolios. For many banks, the prospect of dishonored loans has resulted in stringent tactics that are aimed at curbing this crisis and improving their lending services to the few who meet their requirements.
8 Pages(2000 words)Assignment
International banking and finance law
s the relationship between such banks while financing a infrastructure project in sovereign country and what are the legal structures to adopt and address contractual agreements in the event of one or more banks becoming insolvent. a) The banks come together to provide loan to
2 Pages(500 words)Assignment
IT Project Management
??t able to manage faults, allow configuration management, an alert mechanism, system for monitoring of the critical servers and also provide data links, alongside system log monitoring. Project management is quite challenging and requires a lot of planning. Time, budget, as
6 Pages(1500 words)Assignment
Finance project
This move by the company will see the company in business for the next seven years guaranteeing good returns annually. Therefore, a critical analysis of the financial implications of such
4 Pages(1000 words)Assignment
[Australian Undergraduate] Important Finance group project
These estimates are based on the approximation; therefore, these figures may change with time. However, when making the purchase for most of these items, the personnel may attract discounts that may reduce the overall cost estimates depending on the
4 Pages(1000 words)Assignment
The Federal government has been asking the business community to adhere and comply with all set rules and regulations in the administration of taxes. Tax Solutions Inc. offers revolutionary and professional
12 Pages(3000 words)Assignment
Let us find you another Assignment on topic Project Finance for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us