WACC:

βasset 0.2 Given

βequity 0.60
rf 5.66% 10 yr bond
Market Risk Premium 6% Assumed

ROA 6.86%
Terminal Growth Rate 2.00% Assumed
Year 1999 1999 2000
Example New Model
Capacity in MWs
Production in MWHs 7,884,000
Price in $/ MWH 31 30.3 29.6

Revenue 244,404,000

Fuel Costs 130,086,000

OM costs 27,594,000
Upfront fee 15,000,000
Total Expense 157,680,000 15,000,000 -

EBITDA (15,000,000) -
Depreciation 16,667,000 30,000,000 40,000,000
EBIT (45,000,000) (40,000,000)
Interest 47,300,000 77,187,500
PBT (92,300,000) (117,187,500)
Tax
PAT

FCF (62,300,000) (77,187,500)

Terminal Value
TOTAL FCFF (62,300,000) (77,187,500)
PV (58,300,580) (67,595,321)
NPV 1,308,815,109

Equity 430,000,000 477,300,000

Debt 470,000,000 770,000,000
Cumulative networth 900,000,000 1,247,300,000
ROCE - -
EBITDA/Interest - -
Total Capital
Capital expenditure with 25% savings required 900,000,000 300,000,000
Debt taken 470,000,000 300,000,000
d/C 0.52 0.62
Interest expense 47,300,000 77,187,500
Depreciation 30,000,000 40,000,000

Fuel 16.50 15.68

Operating 3.50 3.15
Depreciation 2.11 1.58
 2001 2002 2003 2004 2005

2,365 2,965 2,965 2,965 2,965

18,645,660 23,376,060 23,376,060 23,376,060 23,376,060
28.9 28.2 27.5 26.8 26.1

538,859,574 659,204,892 642,841,650 626,478,408 610,115,166

292,270,721 366,419,741 366,419,741 366,419,741 366,419,741

58,733,829 73,634,589 73,634,589 73,634,589 73,634,589

351,004,550 440,054,330 440,054,330 440,054,330 440,054,330

187,855,025 219,150,563 202,787,321 186,424,079 170,060,837

40,000,000 40,000,000 40,000,000 40,000,000 40,000,000
110,667,525 141,963,063 125,599,821 109,236,579 92,873,337
77,187,500 77,187,500 77,187,500 77,187,500 77,187,500
33,480,025 64,775,563 48,412,321 32,049,079 15,685,837
42,053,659 53,945,964 47,727,932 41,509,900 35,291,868
68,613,865 88,017,099 77,871,889 67,726,679 57,581,469

156,470,115 175,873,349 165,728,139 155,582,929 145,437,719

156,470,115 175,873,349 165,728,139 155,582,929 145,437,719

128,228,893 134,877,452 118,937,938 104,489,084 91,405,192

477,300,000 477,300,000 477,300,000 477,300,000 477,300,000

770,000,000 770,000,000 770,000,000 770,000,000 770,000,000
1,247,300,000 1,247,300,000 1,247,300,000 1,247,300,000 1,247,300,000
0.09 0.12 0.10 0.09 0.08
2.43 2.84 2.63 2.42 2.20

0.62 0.62 0.62 0.62 0.62

77,187,500 77,187,500 77,187,500 77,187,500 77,187,500
40,000,000 40,000,000 40,000,000 40,000,000 40,000,000
 2006 2007 2008 2009

2,965 2,965 2,965 2,965

23,376,060 23,376,060 23,376,060 23,376,060
25.4 24.7 24.0 24.0

593,751,924 577,388,682 561,025,440 561,025,440

366,419,741 366,419,741 366,419,741 366,419,741

73,634,589 73,634,589 73,634,589 73,634,589

440,054,330 440,054,330 440,054,330 440,054,330

153,697,595 137,334,353 120,971,111 120,971,111

40,000,000 40,000,000 40,000,000 40,000,000
76,510,095 60,146,853 43,783,611 43,783,611
77,187,500 77,187,500 77,187,500 77,187,500
(677,405) (17,040,648) (33,403,890) (33,403,890)
29,073,836 22,855,804 16,637,772 16,637,772
47,436,259 37,291,049 27,145,839 27,145,839

135,292,509 125,147,299 115,002,089 115,002,089

1,231,703,933
135,292,509 125,147,299 115,002,089 1,346,706,022
79,570,556 68,878,701 59,231,677 649,091,518

477,300,000 477,300,000 477,300,000 477,300,000

770,000,000 770,000,000 770,000,000 770,000,000
1,247,300,000 1,247,300,000 1,247,300,000 1,247,300,000
0.06 0.05 0.04 0.04
1.99 1.78 1.57 1.57

0.62 0.62 0.62 0.62

77,187,500 77,187,500 77,187,500 77,187,500
40,000,000 40,000,000 40,000,000 40,000,000
 0 1
Year 1999 2000

Capacity in MWs
Production in MWHs
Price in $/ MWH 31.0 30.3

Revenue -

Fuel Costs
OM costs
Upfront fee 15,000,000
Total Expense 15,000,000 -

EBITDA (15,000,000) -
Depreciation - -
EBIT (15,000,000) -
Interest 47,300,000 71,893,750
PBT (62,300,000) (71,893,750)
Tax
PAT
Debt payment

FCFC (852,700,000) (153,106,250)

Terminal Value
TOTAL FCFF (852,700,000) (153,106,250)
NPV $ 668,616,392
IRR Err:523

Equity 430,000,000 430,000,000

Debt 470,000,000 695,000,000
Cumulative networth 900,000,000 1,125,000,000
Debt/Capital 0.52 0.62
EBITDA/Interest - -
Capital expenditure with 25% savings 900,000,000 225,000,000

Fuel 16.50 15.68

O&M 3.50 3.15
Depreciation 2.11 1.58
 2 3 4 5 6
2001 2002 2003 2004 2005

2,365 2,965 3,565 3,565 4,165

18,645,660 23,376,060 28,106,460 28,106,460 32,836,860
29.6 28.9 28.2 27.5 26.8

551,911,536 675,568,134 792,602,172 772,927,650 880,027,848

292,270,721 366,419,741 440,568,761 440,568,761 514,717,781

58,733,829 73,634,589 88,535,349 88,535,349 103,436,109

351,004,550 440,054,330 529,104,110 529,104,110 618,153,890

200,906,987 235,513,805 263,498,063 243,823,541 261,873,959

30,000,000 37,500,000 45,000,000 45,000,000 52,500,000
200,906,987 235,513,805 263,498,063 243,823,541 261,873,959
93,550,000 91,250,000 99,482,003 82,855,682 90,960,755
107,356,987 144,263,805 164,016,059 160,967,859 170,913,204
76,344,655 89,495,246 100,129,264 92,652,945 99,512,104
124,562,332 146,018,559 163,368,799 151,170,595 162,361,854
163,368,799 151,170,595 162,361,854

23,112,332 274,768,559 82,850,802 279,026,277 80,822,609

23,112,332 274,768,559 82,850,802 279,026,277 80,822,609

430,000,000 430,000,000 430,000,000 430,000,000 430,000,000

920,000,000 920,000,000 981,631,201 830,460,606 893,098,752
1,350,000,000 1,350,000,000 1,411,631,201 1,260,460,606 1,323,098,752
0.68 0.68 0.70 0.66 0.68
2.15 2.58 2.65 2.94 2.88
225,000,000 225,000,000 225,000,000
 7 8 9 10
2006 2007 2008 2009

4,165 4,765 5,365 5,365

32,836,860 37,567,260 42,297,660 42,297,660
26.1 25.4 24.7 24.0

857,042,046 954,208,404 1,044,752,202 1,015,143,840

514,717,781 588,866,801 663,015,821 663,015,821

103,436,109 118,336,869 133,237,629 133,237,629

618,153,890 707,203,670 796,253,450 796,253,450

238,888,157 247,004,735 248,498,753 218,890,391

52,500,000 60,000,000 67,500,000 67,500,000
238,888,157 247,004,735 248,498,753 218,890,391
98,361,354 81,579,234 90,448,434 95,378,410
140,526,802 165,425,501 158,050,319 123,511,981
90,777,499 93,861,799 94,429,526 83,178,348
148,110,657 153,142,935 154,069,227 135,712,042
148,110,657 153,142,935 154,069,227 135,712,042

73,972,011 294,722,169 87,017,660 73,590,452

1,544,490,968
73,972,011 294,722,169 87,017,660 1,618,081,420

430,000,000 430,000,000 430,000,000 430,000,000

969,988,095 816,845,159 887,775,933 977,063,891
1,399,988,095 1,246,845,159 1,317,775,933 1,407,063,891
0.69 0.66 0.67 0.69
2.43 3.03 2.75 2.29
225,000,000 225,000,000 225,000,000