Discuss about the Project Economics and Finance.
Project finance in general is considered with the application of different techniques which are seen to be identified with the features of non-recourse or limited recourse financial factors for a project related to any public or private services. The project financing is considered as the loan amount which is relied on the numerous aspects of project debt and equity. Some of the main discussion of the report are related with identification of the challenges, providing insightful solutions, competencies achievement, self-reflection and relevancy of a specific project in future. The various types of the discussions on the competencies of the achievement are further segregated into different type of the depictions which are considered with linking the learning lessons and making progress with the technical and the managerial components (Yescombe and Yescombe 2014). As per the International Project Finance Association project finance is defined as the financing for the long-term infrastructure, industrial projects and public services as per the non-recourse or limited nature of the financial structure in which the project debt and the equity used is seen to be based on the various types of the factors which are associated to the cash flow generated by the project (Pinto 2017).
The project I would like to propose is for a long-term project of large multi-storeyed shopping centre. The shopping centre will be consisting of 8 storeys with provision for 40 retail outlets along with parking space for 120 vehicles.
I believe the following solution will be appropriate for resolving the financial and economic aspects of the project:
Identification of the starting and the target competencies at the start of the subject
Some of the important nature of the competencies of the subject needs to be determined with the several types of the factors which needs to be taken into regards with the amount of initial cash outflow planned for the project. The financing of the project needs to be also taken into consideration with the evaluation of the various type the elements which is seen to be determined with the use of the tools such as SPV/SPE (Clews 2016). Furthermore, the target competencies need to be also determined with the overall understanding of the return on investment for the project which needs to be financed. The varied nature of the other tools for determining the competencies of the project needs to be also evaluated with the several types of the factors which need to be assessed in terms of the time value of money (Wright 2015). The Future value of the money needs to be depicted with the use of compound interest method.
The starting competency needs to be also evaluated in terms of the present and future worth of the money. Some of the different types of the other aspects needs to be also considered with the declining balance and the use of depreciation method (Rossi and Stepic 2015). This needs to be based on the evaluation of the project which shall be useful in terms of the determining the value of the project in terms of the acquisition cost and book life of the project. The annual deprecation charge needs to be also measured for the evaluation of the depreciation as per the declining balance (Yescombe 2014).
The main outcomes of the future value depiction of the project will be conducive in terms determining the value of the project at a later date and also the present value of the project. The depreciation method will be beneficial in terms of the assessment of the project as per the calculation of the value of the asset overtime and cost allocation as per tangibility of the asset (Yescombe 2014). The outcomes of the application of the benefit cost ratio will be helpful in the determination of the various types of the factors which are based on the identification of the relationship of the cost and the benefits of the proposed project. In addition to this, the benefit cost ratio will be also applicable with various types of the tools related to the quantitative and qualitative evaluation of information. The approach of the cost benefit ratio will be able to identify the various type of the funding constraints of the project (Higham, Bridge and Farrell 2016). The development factors are also depicted in terms of finding the equivalent uniform annual cost. The different types of the investment are also seen to be based on the corresponding investment and uniform cost which needs to be paid every year. The cost per year will be based on the operating and asset value as per the entire lifespan of the project. The EUAC is also seen to consider the equivalent investment which will cost in case the payment is fixed or uniform in each year. The important contemplation is also seen to be depicted in team of knowing about understanding of the benefit/ cost ratio, ROI, EUAC and the related calculations (Hatcher 2015).
The linking of the managerial components needs to be based on the depiction of the information which has been seen to be considered as per the information based on the ASX norms included with the equities, options, futures, debt securities, indices and hybrids. The different learnings of the study need to be related with the financing option available for the financing of the project and the consideration of the appropriate tool for the finance options available for project and different types of the tools for the project evaluation (Subramanian and Tung 2016). The important aspect of the linking the study needs to be also well-thought-out with the understanding the basic concepts of the capital budgeting tools and relating the same with the study (Rossi and Stepic 2015).
The study has guided me to know about the SPV and SPE tools. I have been also able to get the idea for the project definition and purpose for a long-term project for a shopping centre. Some of the various types of the other types of the learnings are depicted with the time value of the money. I have known about the risk factor, interest percentage along with the investment amount which needs to be taken into consideration over the period of the project. The study has allowed me to get familiar with the constraints related to the future value of the investment over one year or more time. I have been able to know about the present and future worth for a certain amount which should be considered for making investment in a large project. The discourse of the study has enabled me to recognize about the depreciation method. This is seen to be depicted in terms of the straight-line method of depreciation, double declining method and useful life of an asset. I have also able to know about the depreciation rate calculation. The learnings from the study has also allowed to gather appropriate information on the benefit cost ratio aspects. In addition to this, I have been also able to know about the ROI method to determine the return on the investment as an alternative to the methods such as NPV and BCR. Like the NPV method the BCR and ROI is considered as an effective tool for decision making which is seen to be based on the analysis of the single period analysis. Some of the concepts such as EUAC has been conducive in terms of the determination of the different types of the options for the investment which are considered with knowing about the investment cost which needs to be paid in terms of the cost per year assessment and the operating cost of the asset over time.
The study has given me the opportunity in gaining knowledge about the concepts of the equity-based theories, debt instruments, options, futures, hybrid securities, indices and bonds. The main form of the learnings about the corporate financial analysis has been seen to be conducive in knowing about the various forms of depiction of the study which are seen to be considered with the valuation methods such as EVA, net cash method and the use of the discounted cash flow model.
The various types of the learnings of the study will be further considered as per the career plans for working as a financial consultant. I will be able to suggest to my clients about the various types of tools which may be implemented to know about the time value of the money. The understanding of the structuring nature of the company will be also helpful in determining the valuation techniques as per the financial position of the company. The evaluation of the study will allow to understand the evaluation of the income statement in a better way.
Conclusion
The various types of the challenges related to the project financing are seen with political and legal environment. In addition to this, there has been several types of the factor which are depicted in terms of the problems which are considered with the legal formalities of the project. Some of the different types of the considerations of the project is based on the time value of money, future value and present worth of the project. The external threats to the project are considered with the economic situation in the operating country. The main challenge is seen to be depicted with the macroeconomic factors. Some of the varied nature of the other factors of the challenges needs to be determined in the terms of the aspects taken into consideration with the decreasing prospect of the project financing during recessionary pressure. The consideration of the project finance needs to be regarded with the use of the special purpose vehicle/ SPE and entity itself which is conducting the project of the large multi-storeyed shopping centre. The separate legal entity will be conducive in terms of knowing about the solution to the problem which are seen to be based on the using a separate legal entity for the large project. Moreover, the different aspects of the project financing need to be also depicted in terms of understating the project finance definition and purpose. The time value consideration will be conducive in guiding about the investing guideline of the money which will be worth in the future along with the individual project options. Some of the important nature of the competencies of the subject needs to be determined with the several types of the factors which needs to be taken into regards with the amount of initial cash outflow planned for the project. The financing of the project needs to be also taken into consideration with the evaluation of the various type the elements which is seen to be determined with the use of the tools such as SPV/SPE. The main outcomes of the future value depiction of the project will be conducive in terms determining the value of the project at a later date and also the present value of the project.
References
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