QUESTION
ANSWER
| Calculation of Internal Rate of Return for Sponsors | ||||||||||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 |
| $ in thousands | ||||||||||||||||
| Initial Cost | -86000 | |||||||||||||||
| Revenue from | ||||||||||||||||
| Electricity | 69750 | 73237.5 | 76899.375 | 80744.34375 | 84781.5609375 | 89020.638984375 | 93471.6709335938 | 98145.2544802735 | 103052.517204287 | 108205.143064501 | 113615.400217727 | 119296.170228613 | 125260.978740044 | 131524.027677046 | 138100.229060898 | |
| Steam | 4725 | 4961.25 | 5209.3125 | 5469.778125 | 5743.26703125 | 6030.4303828125 | 6331.95190195313 | 6648.54949705078 | 6980.97697190332 | 7330.02582049849 | 7696.52711152341 | 8081.35346709958 | 8485.42114045456 | 8909.69219747729 | 9355.17680735116 | |
| Natural gas | 50490.34 | 53519.7604 | 56730.946024 | 60134.80278544 | 63742.8909525664 | 67567.4644097204 | 71621.5122743036 | 75918.8030107619 | 80473.9311914076 | 85302.367062892 | 90420.5090866656 | 95845.7396318655 | 101596.484009777 | 107692.273050364 | 114153.809433386 | |
| Total revenue | 124965.34 | 131718.5104 | 138839.633524 | 146348.92466044 | 154267.718921316 | 162618.533776908 | 171425.135109851 | 180712.606988086 | 190507.425367598 | 200837.535947892 | 211732.436415916 | 223223.263327578 | 235342.883890276 | 248125.992924887 | 261609.215301635 | |
| Less:operating expenses | 6500 | 6760 | 7030.4 | 7311.616 | 7604.08064 | 7908.2438656 | 8224.573620224 | 8553.55656503296 | 8895.69882763428 | 9251.52678073965 | 9621.58785196924 | 10006.451366048 | 10406.7094206899 | 10822.9777975175 | 11255.8969094182 | |
| Less:depreciation | 8600 | 8600 | 8600 | 8600 | 8600 | 8600 | 8600 | 8600 | 8600 | 8600 | ||||||
| Less:Interest cost | 3096.00 | 2882.28 | 2651.47 | 2402.19 | 2132.97 | 1842.22 | 1528.20 | 1189.06 | 822.79 | 427.22 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Profit before tax | 106769.34 | 113476.23 | 120557.76 | 128035.11 | 135930.66 | 144268.07 | 153072.36 | 162369.99 | 172188.94 | 182558.79 | 202110.85 | 213216.81 | 224936.17 | 237303.02 | 250353.32 | |
| Less:tax | 42707.736 | 45390.4902788025 | 48223.1045367091 | 51214.0456002563 | 54372.2653382958 | 57707.2289111563 | 61228.9446970169 | 64947.9959972833 | 68875.574629095 | 73023.5165198216 | 80844.3394255785 | 85286.724784612 | 89974.4697878343 | 94921.2060509478 | 100141.327356887 | |
| Profit after tax | 64061.60 | 68085.74 | 72334.66 | 76821.07 | 81558.40 | 86560.84 | 91843.42 | 97421.99 | 103313.36 | 109535.27 | 121266.51 | 127930.09 | 134961.70 | 142381.81 | 150211.99 | |
| Add:depreciation | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | 8600.00 | ||||||
| Residual value of the project | 75000.00 | |||||||||||||||
| Cash flow | -86000 | 72661.60 | 76685.74 | 80934.66 | 85421.07 | 90158.40 | 95160.84 | 100443.42 | 106021.99 | 111913.36 | 118135.27 | 121266.51 | 127930.09 | 134961.70 | 142381.81 | 225211.99 |
| IRR | 90.02% | |||||||||||||||
| Calculation of Internal Rate of Return for Sponsors | |||||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| $ in thousands | |||||||||||
| Cash Flows | -38700 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 | $5,767.44 |
| IRR | 8% | ||||||||||
Working
| $ in thousands | ||||
| a | Calculation of revenue in first year | |||
| Volume at 90% capacity | Price per volume | Total revenue | ||
| Electricity | 1550000 | 45 | 69750 | |
| Steam | 1050000 | 4.5 | 4725 | |
| Natural gas | 14850100 | 3.4 | 50490.34 | |
| Total revenue | 124965.34 | |||
| b | Calculation of debt and equity content | |||
| Initial cost | 86000 | |||
| Equity content | 47300 | |||
| Debt content | 38700 | |||
| c | Debt repayment schedule | |||
| Present value of debt | 38700 | |||
| Rate | 8% | |||
| No of period | 10 | |||
| Equal annual instalment(PMT) | $5,767.44 | |||
| d | Calculation of interest | |||
| Year | Principal | Interest | Debt outstanding | |
| 0 | 38700 | |||
| 1 | $2,671.44 | 3096.00 | $36,028.56 | |
| 2 | $2,885.16 | 2882.28 | $33,143.40 | |
| 3 | $3,115.97 | 2651.47 | $30,027.43 | |
| 4 | $3,365.25 | 2402.19 | $26,662.19 | |
| 5 | $3,634.47 | 2132.97 | $23,027.72 | |
| 6 | $3,925.22 | 1842.22 | $19,102.50 | |
| 7 | $4,239.24 | 1528.20 | $14,863.26 | |
| 8 | $4,578.38 | 1189.06 | $10,284.87 | |
| 9 | $4,944.65 | 822.79 | $5,340.22 | |
| 10 | $5,340.22 | 427.22 | $0.00 | |
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