Npv cash flow model, Financial Accounting

As discussed earlier, the base case public sector comparator (PSC) will be a benchmark for different project bidding proposals when choosing the preferred bidder to provide the best value for money, and the NPV is proposed to measure the long-term value for money for a PPP project. In this the project NPV cash flow model was constructed to describe risk-free cash flow which does not include any valuation of risks. The risk network addressed in section 6.2 will be modeled to link with the NPV cash flow model, which will be able to produce time-profiles of NPV for the base case (PSC). According to an accounting principle, the project cash flow can be calculated as:

Net Cash Flow F = [sum of revenue (operation revenues) - sum of expense (construction costs + operation costs + interest + depreciation))*[1-tax rate] + annual raising capital - annual principal repayment + depreciation, which will be further converted to be net present values discounted over time.

Based on the major components of a project NPV cash flow as stated, this researcher divided the structure of risk-free cash flow model into one major model linked with six sub-models. The project cash flow model is used to calculate NPV values and the six sub-models are: (a) operating revenue sub-model which is used to calculate operation costs;

(b) Construction cost sub-model which is used to calculate construction costs;

(c) Operating cost sub-model which is used to calculate operation costs;

(d) Project financing sub-model which is used to calculate principal repayment and interest; Depreciation sub-model is used to calculate depreciation;

(e) Discount rate sub-model which is used to calculate discount rate. later, a risk cost network for the expected risk effects was modeled and linked to the related sub-models to address its impact on project cash flow. All of the sub-models linked with the risk cost network were linked to the project cash flow model in order to calculate NPV values by compounding all risk effects. This way, the model structure was clear for ease of management, especially when observing the NPV value changes by changing a risk variable.

Posted Date: 2/25/2013 5:34:24 AM | Location : United States







Related Discussions:- Npv cash flow model, Assignment Help, Ask Question on Npv cash flow model, Get Answer, Expert's Help, Npv cash flow model Discussions

Write discussion on Npv cash flow model
Your posts are moderated
Related Questions
Ask question Sean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end


LANDLORD'S RIGHT OF DISTRESS The Landlord's right to distrain for arrears of rent is not lost on the tenant's bankruptcy, but 1) Distress can only be levied after commencement

The comparative financial statement of new World Piano Company for 2003,2002, and 2001 included the following selected data: 2003 2002 2003 In Millions Cash $67 $66 $62 Short T

what are the types and objectives of international accounting standersds?

The Budvar Company purchases parts from a foreign customer on December 1, Year 1, with payment of 20,000 crowns 20,000 crowns to be made on March 1, Year 2.  Budvar enters into a f

Sigma is thinking about purchasing a new clam digger for $14,000. The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in year 2, $5,000 in year 3, an

On January 1, 2010, Anderson Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar. 1 Issued

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 The beta coefficient

A quick glance at the trend in the Operating and Net Profit Margin figure indicates an improvement in the margins over the 2 year period. As is evident from the graph above HAIL du